Registration Requirements for Pooled Plan Providers
| Published date | 01 September 2020 |
| Citation | 85 FR 54288 |
| Record Number | 2020-18504 |
| Section | Proposed rules |
| Court | Employee Benefits Security Administration |
Federal Register, Volume 85 Issue 170 (Tuesday, September 1, 2020)
[Federal Register Volume 85, Number 170 (Tuesday, September 1, 2020)]
[Proposed Rules]
[Pages 54288-54311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18504]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2510
RIN 1210-AB94
Registration Requirements for Pooled Plan Providers
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would establish the requirements for
registering with the Department of Labor as a ``pooled plan provider''
for ``pooled employer plans'' under sections 3(43) and 3(44) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
The Setting Every Community Up for Retirement Enhancement Act of 2019
(SECURE Act) provides that newly permitted ``pooled plan providers''
can begin offering ``pooled employer plans'' on January 1, 2021, but
requires such persons to register with the Secretary of Labor before
beginning operations. The proposed rule would also establish a new
form--EBSA Form PR (Pooled Plan Provider Registration)--as the required
filing format for pooled plan provider registrations. Filing the
proposed Form
[[Page 54289]]
PR with the Department of Labor would also satisfy the SECURE Act
requirement to register with the Treasury Department. The proposed rule
would affect persons wishing to serve as pooled plan providers,
employee defined contribution pension benefit plans that are operated
as pooled employer plans, employers participating in such plans, and
participants and beneficiaries covered by such plans.
DATES: Comments are due on or before October 1, 2020.
ADDRESSES: You may submit written comments, identified by RIN 1210-
AB94, by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments. To facilitate receipt and
processing of comments, the Department of Labor encourages interested
parties to submit their comments electronically.
Mail: Office of Regulations and Interpretations, Employee Benefits
Security Administration, Room N-5655, U.S. Department of Labor, 200
Constitution Ave. NW, Washington, DC 20210, Attention: Proposed
Registration Requirements for Pooled Plan Providers RIN 1210-AB94.
Instructions: All submissions must include the agency name and
Regulatory Identifier Number (RIN) for this rulemaking. Any comment
that is submitted will be shared with the Internal Revenue Service
(IRS). If you submit comments electronically, do not submit paper
copies. Comments will be available to the public, without charge,
online at http://www.regulations.gov and http://www.dol.gov/agencies/ebsa and at the Public Disclosure Room, Employee Benefits Security
Administration, Suite N-1513, 200 Constitution Ave. NW, Washington, DC
20210.
Warning: Do not include any personally identifiable or confidential
business information that you do not want publicly disclosed. Comments
are public records posted on the internet as received and can be
retrieved by most internet search engines.
FOR FURTHER INFORMATION CONTACT: Colleen Brisport Sequeda, Office of
Regulations and Interpretations, Employee Benefits Security
Administration, U.S. Department of Labor, (202) 693-8500 (this is not a
toll-free number) for questions related to pooled plan provider
reporting requirements under Title I of ERISA.
Customer service information: Individuals interested in obtaining
general information from the Department of Labor concerning Title I of
ERISA may call the EBSA Toll-Free Hotline at 1-866-444-EBSA (3272) or
visit the Department's website (www.dol.gov/agencies/ebsa).
SUPPLEMENTARY INFORMATION:
I. Legal Framework
Under ERISA, an employee benefit plan (whether a pension plan or a
welfare plan) must be sponsored by an employer, by an employee
organization, or by both. Section 3(5) of ERISA defines the term
``employer'' for this purpose as ``any person acting directly as an
employer, or indirectly in the interest of an employer, in relation to
an employee benefit plan, and includes a group or association of
employers acting for an employer in such capacity.'' These definitional
provisions of ERISA have been interpreted as permitting a multiple
employer plan (MEP) to be established or maintained by a cognizable,
bona fide group or association of employers that is controlled by the
employer members and that acts in the interests of its employer members
to provide benefits to their employees.\1\ This approach is based on
the premise that the person or group that maintains the plan is tied to
the employers and employees that participate in the plan by some common
economic or representational interest or genuine organizational
relationship unrelated to the provision of benefits. The Department of
Labor (Department) has taken steps, through a final rule on
``association retirement plans'' at 29 CFR 2510.3-55, to clarify and
expand the types of arrangements that can be treated as multiple
employer plans under Title I of ERISA. The final rule did not, however,
extend to so-called ``open MEPs.'' \2\
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\1\ The SECURE Act did not change the conditions for plans that
were already permitted under section 3(2) of ERISA to act as a
single MEP. See, e.g., Advisory Opinions 2008-07A, 2003-17A, and
2001-04A. Those classes of multiple employer plans (e.g., employer
association retirement plans and plans sponsored by professional
employer organizations) are outside of the scope of this rulemaking,
as are multiple employer plans established and maintained pursuant
to bona fide collective bargaining.
\2\ See the preamble discussion in the Final Rule on the
Definition of ``Employer'' Under Section 3(5) of ERISA--Association
Retirement Plans and Other Multiple-Employer Plans, 84 FR 37508
(July 31, 2019). The Department did, however, seek comments through
a Request for Information published with that proposed rule seeking
comments on whether, and if so under what conditions, open MEP
structures should be treated as a multiple employer plan for
purposes of Title I of ERISA.
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A primary goal of the Setting Every Community Up for Retirement
Enhancement Act of 2019 (SECURE Act),\3\ authorizing of pooled employer
plans was to remove possible barriers to the broader use of multiple
employer plans. Among other things, the SECURE Act amended section 3(2)
of ERISA and added section 3(43) to ERISA to authorize a new type of
ERISA-covered defined contribution pension plan--a ``pooled employer
plan'' operated by a ``pooled plan provider''--in which multiple
unrelated employers will be able to participate without the need for
any commonality among the participating employers or other genuine
organizational relationship unrelated to participation in the plan,
thus enabling a type of open MEP. By allowing most of the
administrative and fiduciary responsibilities of sponsoring a
retirement plan to be transferred to a ``pooled plan provider,'' the
pooled employer plan can offer employers, especially small employers, a
way of offering their employees a workplace retirement savings option
with reduced burdens and costs compared to sponsoring their own
separate retirement plan. New section 3(44) of ERISA establishes
requirements for ``pooled plan providers,'' including a requirement to
register with the Department and the Department of the Treasury
(Treasury Department) before beginning operations as a pooled plan
provider. The effective date for these provisions allows ``pooled
employer plans'' to begin operating on January 1, 2021.
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\3\ The SECURE Act was enacted as Division O of the Further
Consolidated Appropriations Act, 2020 (Pub. L. 116-94) (December 20,
2019).
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Under section 3(2) of ERISA, a pooled employer plan is treated for
purposes of ERISA as a single plan that is a multiple employer plan. A
``pooled employer plan'' is defined in section 3(43) as a plan that is
an individual account plan established or maintained for the purpose of
providing benefits to the employees of two or more employers; that is a
qualified retirement plan or a plan funded entirely with individual
retirement accounts (IRA plan); and the terms of which must meet
certain requirements set forth in the statute.\4\ Specifically, the
terms of the plan must satisfy the following requirements:
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\4\ 29 U.S.C. 1002(43). The term ``pooled employer plan'' does
not include a multiemployer plan or plan maintained by employers
that have a common interest other than having adopted the plan. The
term also does not include a plan established before the date the
SECURE Act was enacted unless the plan administrator elects to have
the plan treated as a pooled employer plan and the plan meets the
ERISA requirements applicable to a pooled employer plan established
on or after such date.
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Designate a pooled plan provider and provide that the
pooled plan provider is a named fiduciary of the plan;
designate one or more trustees (other than an employer in
the plan) to be responsible for collecting
[[Page 54290]]
contributions to, and holding the assets of, the plan, and require the
trustees to implement written contribution collection procedures that
are reasonable, diligent, and systematic;
provide that each employer in the plan retains fiduciary
responsibility for the selection and monitoring, in accordance with
ERISA fiduciary requirements, of the person designated as the pooled
plan provider and any other person who is designated as a named
fiduciary of the plan, and the investment and management of the portion
of the plan's assets attributable to the employees of that employer (or
beneficiaries of such employees) in the plan to the extent not
delegated to another fiduciary by the pooled plan provider and subject
to the ERISA rules relating to self-directed investments;
provide that employers in the plan, and participants and
beneficiaries, are not subject to unreasonable restrictions, fees, or
penalties with regard to ceasing participation, receipt of
distributions, or otherwise transferring assets of the plan in
accordance with applicable rules for plan mergers and transfers;
require the pooled plan provider to provide to employers
in the plan any disclosures or other information that the Secretary of
Labor may require, including any disclosures or other information to
facilitate the selection or monitoring of the pooled plan provider by
employers in the plan;
require each employer in the plan to take any actions that
the Secretary of Labor or pooled plan provider determines are necessary
to administer the plan or to allow for the plan to meet the ERISA and
Internal Revenue Code (Code) requirements applicable to the plan,
including providing any disclosures or other information that the
Secretary of Labor may require or which the pooled plan provider
otherwise determines are necessary to administer the plan or to allow
the plan to meet such ERISA and Code requirements; and
provide that any disclosure or other information required
to be provided to participating employers may be provided in electronic
form and will be designed to ensure only reasonable costs are imposed
on pooled plan providers and employers in the plan.
The fidelity bonding requirements in ERISA section 412 apply to
fiduciaries and other persons handling the assets of a pooled employer
plan but the maximum bond amount for each such plan official is
$1,000,000 as compared to the $500,000 maximum that applies in the case
of other ERISA-covered plans that do not hold employer securities.\5\
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\5\ The SECURE Act requires that pooled plan providers must
ensure that all plan fiduciaries and other persons who handle plan
assets are bonded in accordance with section 412 of ERISA. In the
Department's view, the SECURE Act confirms that application of ERISA
section 412 requirements to pooled employer plans, except
establishing $1,000,000 as the maximum bond amount compared to
$500,000 for plans that do not hold employer securities, and makes
clear that the pooled plan provider is subject to the provisions of
ERISA section 412(b), which provides that ``it shall be unlawful for
any plan official of such plan or any other person having authority
to direct the performance of such functions, to permit such
functions, or any of them, to be performed by any plan official,
with respect to whom the requirements of subsection (a) [of ERISA
section 412] have not been met.'' Thus, in the Department's view,
the normal section 412 rules for ERISA plans govern the bonding
requirements for pooled employer plans. See 29 CFR 2550.412-1, 29
CFR part 2580; see also Field Assistance Bulletin 2008-04 (providing
a general description of statutory and regulatory requirements for
bonding). For example, the Department does not read the SECURE Act
as broadening the section 412 bonding rules to apply to persons who
handle plan assets regardless of whether they handled plan funds or
other property within the meaning of section 412. Similarly, the
existing statutory and regulatory exemptions for certain banks,
insurance companies, and registered broker-dealers continue to
apply.
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A ``pooled plan provider'' with respect to a pooled employer plan
is defined in ERISA section 3(44) to mean a person that meets the
following requirements:
Is designated by the terms of the plan as a named
fiduciary under ERISA, as the plan administrator, and as the person
responsible to perform all administrative duties (including conducting
proper testing with respect to the plan and the employees of each
employer in the plan) that are reasonably necessary to ensure that the
plan meets the Code requirements for tax-favored treatment and the
requirements of ERISA and to ensure that each employer in the plan
takes actions as the Secretary or the pooled plan provider determines
necessary for the plan to meet Code and ERISA requirements, including
providing to the pooled plan provider any disclosures or other
information that the Secretary may require or that the pooled plan
provider otherwise determines are necessary to administer the plan or
to allow the plan to meet Code and ERISA requirements;
acknowledges in writing its status as a named fiduciary
under ERISA and as the plan administrator;
is responsible for ensuring that all persons who handle
plan assets or are plan fiduciaries are bonded in accordance with ERISA
requirements; and
registers as a pooled plan provider.
The SECURE Act specifies that the Secretary may perform audits,
examinations, and investigations of pooled plan providers as may be
necessary to enforce and carry out the purposes of the provision. The
SECURE Act also directs the Department to issue such guidance as it
determines appropriate to carry out the pooled employer plan and pooled
plan provider provisions, including guidance (1) to identify the
administrative duties and other actions required to be performed by a
pooled plan provider, and (2) that provides, in appropriate cases
involving a noncompliant employer, for transfer of plan assets
attributable to employees of the noncompliant employer (or
beneficiaries of such employees) to a plan maintained only by that
employer (or its successor), to a tax-favored retirement plan for each
individual whose account is transferred, or to any other arrangement
that the Department determines is appropriate, and for the noncompliant
employer (and not the plan with respect to which the failure occurred
or any other employer in the plan) to be liable for any plan
liabilities attributable to employees of the noncompliant employer (or
beneficiaries of such employees), except to the extent provided in the
guidance. An employer or pooled plan provider is not treated as failing
to meet a requirement of guidance issued by the Secretary if, before
the issuance of such guidance, the employer or pooled plan provider
complies in good faith with a reasonable interpretation of the
provisions to which the guidance relates.
The SECURE Act also provides that the Form 5500 annual return/
report of employee benefit plan (Form 5500) filing for a multiple
employer plan subject to section 210 of ERISA, including a pooled
employer plan, must include a list of the employers in the plan, a good
faith estimate of the percentage of total contributions made by such
employers during the plan year, the aggregate account balances
attributable to each employer in the plan (determined as the sum of the
account balances of the employees of each employer and the
beneficiaries of such employees) and, with respect to a pooled employer
plan in particular, the identifying information for the person
designated under the terms of the plan as the pooled plan provider. In
addition, the provision authorizes the Department to prescribe
simplified reporting for pooled employer plans that cover fewer than
1,000 participants, but only if no single employer in the plan has 100
or more participants covered by the plan.
The SECURE Act does not limit the class of persons who can act as
pooled plan providers, but it is expected that
[[Page 54291]]
financial services companies (such as insurance companies, banks, trust
companies, consulting firms, record keepers, and third-party
administrators) will be the primary sponsors of pooled employer plans.
As noted above, however, section 3(44) does require as a condition of
being a pooled plan provider that the person ``registers as a pooled
plan provider with the Secretary, and provides to the Secretary such
other information the Department may require, before operations as a
pooled plan provider.'' \6\
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\6\ ERISA section 3(44)(a)(ii).
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In the Department's view, the statutory purpose of the registration
requirement is to provide the Department with sufficient information
regarding persons acting as pooled plan providers to engage in
effective monitoring and oversight of this new type of ERISA retirement
plan. Although the Department does not have specific details as to how
pooled employer plans authorized under the SECURE Act will be
structured or operated, the Department has assumed that they may be
similar to other currently operating multiple employer plans.
Additionally, there may be challenges associated with these new types
of multiple employer plans that the Department, the Treasury
Department, or IRS, as the federal agencies charged with oversight of
private-sector pension plans, may need to address. The SECURE Act
expressly provides that participating employers will retain certain
residual fiduciary responsibilities, including for the selection and
oversight of the pooled plan provider and the plan's other named
fiduciaries. This raises concerns that the potential for inadequate
employer oversight of the activities of a pooled employer plan and its
plan fiduciaries and other service providers may be greater than for
other plans sponsored by an employer because the nature of the plan
involves participating employers passing along more responsibility to
the pooled plan provider than they do in other plan arrangements.
The registration process and requirements must enable the
Department to identify pooled plan providers when they begin operating
and effectively oversee their actions and the pooled employer plans
they operate. While pooled plan providers will be required to file
Forms 5500 for the pooled employer plans they operate, Forms 5500
generally are not filed until seven to nine-and-a-half months after the
end of the plan year.\7\ In the absence of appropriate detail in the
registration statement, a pooled plan provider could begin operating
multiple plans with hundreds or thousands of participants and millions
of dollars without the agencies having any information about the pooled
employer plans for almost two years.
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\7\ Title I and Title IV of ERISA and the Code establish annual
reporting requirements for employee benefit plans. DOL, the Treasury
Department (specifically the IRS), and the Pension Benefit Guaranty
Corporation jointly developed the Form 5500 so employee benefit
plans could use one form to satisfy annual reporting requirements
under ERISA and the Code. The Form 5500 is part of ERISA's overall
reporting and disclosure framework, helping to assure that employee
benefit plans are operated and managed in accordance with certain
prescribed standards and that participants and beneficiaries, as
well as regulators, are provided or have access to sufficient
information to protect the rights and benefits of plan participants
and beneficiaries.
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In determining how best to implement the statutory registration
requirement, the Department considered a number of alternatives with
respect to any registration statement requirement including whether it
must be filed when the provider begins operations in anticipation of
operating one or more pooled employer plans, when it begins operating
each individual pooled employer plan, or both. The Department also does
not believe that the SECURE Act provisions preclude or were intended to
preclude the Department from imposing reasonable ongoing reporting
requirements to enable the Department to effectively oversee pooled
plan providers and the pooled employer plans they operate. Therefore,
as discussed in more detail below, relying on the language in the
SECURE Act requiring a registration statement as well as on its broad
authority under section 505 of ERISA to prescribe regulations,\8\
including forms, to enable the Department to carry out its statutory
oversight mission, the Department has chosen the structure set out in
the proposal.
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\8\ Section 505 of ERISA provides generally that the Secretary
may prescribe such regulations the Secretary ``finds necessary or
appropriate to carry out the provisions of this subchapter. Among
other things, such regulations may define accounting, technical and
trade terms used in such provisions; may prescribe forms; and may
provide for the keeping of books and records, and for the inspection
of such books and records (subject to section 1134(a) and (b) of
this title).'' 29 U.S.C. 1135.
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The proposal would require an initial registration filing and
supplemental filings to report changes in the information in the
initial filing, information about each specific pooled employer plan
before initiation of operations, and information on specified
reportable events, time-sensitive knowledge of which are important for
the Department, the Treasury Department, and the IRS to carry out
oversight and for participating employers to be able to exercise their
fiduciary duties of selection and monitoring. The proposal would
require a final filing once the last pooled employer plan has been
terminated and ceased operations.
The Department believes that the initial registration, supplemental
filing, and final filing requirements, when combined with the Form 5500
annual reporting requirements, will give the Department the timely
access to pooled plan provider information needed to fulfill the
monitoring and oversight tasks the SECURE Act placed on the agencies
and would be less burdensome and less costly for pooled plan providers
and pooled employer plans than some alternatives that were considered.
The Department is also proposing to establish a new EBSA form--EBSA
Form PR (Pooled Plan Provider Registration) (Form PR)--as the required
filing format for pooled plan provider registrations as a way to
facilitate compliance with the regulatory registration requirements.
Filing the proposed Form PR is intended to satisfy the respective
requirements under Title I of ERISA and the Code to register with both
the Department and the Treasury Department.
This proposed rule is expected to be an Executive Order (E.O.)
13771 deregulatory action. Details on the estimated effects of this
proposed rule can be found in the economic analysis.
II. Registration Requirements for Pooled Plan Providers
Specifically, as described above, the SECURE Act expressly provides
a requirement to register as a pooled plan provider and a separate
authorization for the Department to require reporting of other
information. The SECURE Act did not include specific content
requirements for the pooled plan provider registration. The Department
is proposing that the first part of the process be an initial
``registration'' filing of basic identifying information about the
pooled plan provider and some information, for example, about its
structure, affiliated service providers, marketing activities, and
pending legal or regulatory proceedings. The second part is a
supplemental filing requirement intended to provide the agencies,
participating employers and employees, and the public information about
reportable events, which would include any change in the information
filed as part of the initial registration and also significant
financial and
[[Page 54292]]
operational events related to the pooled plan provider and the pooled
employer plans it sponsors.
A. Initial Registration
For purposes of the initial registration, the Department proposes
to define ``beginning operations as a pooled plan provider'' to mean
publicly marketing pooled plan provider services or publicly offering a
pooled employer plan. In the Department's view, an important purpose of
the requirement to register before beginning operations as a pooled
plan provider is to provide the Department, the Treasury Department,
the IRS, prospective employer customers, and the public with notice and
relevant information about the pooled plan provider. Accordingly, the
initiation of public marketing services as a pooled plan provider or
publicly offering one or more pooled employer plans are important
registration triggers. The Department does not intend to require
registration as a result of preliminary business activities, such as
establishing the business organization, creating a business plan,
obtaining necessary licenses or entering into contracts with
subcontractors or partners, obtaining an federal employer
identification number, or actions and communications designed to
evaluate market demand in advance of publicly marketing pooled plan
provider services or publicly offering one or more pooled employer
plans.
As noted above, the SECURE Act left it to the agencies' discretion
to establish specific content requirements for the pooled plan provider
registration. In developing this proposal, the Department focused on
information needed by the agencies to identify, contact, and engage in
timely oversight of pooled plan providers, as well as on the
information that the Department could post on its website that would
provide employers considering participating in a pooled employer plan,
participating employees, covered employees, and other interested
stakeholders the ability to identify, contact, and do some due
diligence on pooled plan providers. The Department also considered the
content requirements of other registration requirements under federal
and state securities laws for investment advisers and broker-dealers.
For example, among other information, registrations require disclosures
of identifying and contact information, background information about
the registrant's business, information about relevant management
policies, names of executives and general partners, relevant legal
proceedings and previous violations, and relevant negative information,
such as legal problems or other business events or trouble that would
be of consequence to users of the registration information. The
Department also focused on minimizing the administrative burden and
expense involved for pooled plan providers and the pooled employer
plans they operate.
Based on those considerations, the Department is proposing that a
prospective pooled plan provider would need to file the following
information 30 to 90 days before beginning operations as a pooled plan
provider:
1. Legal Business Name and any Trade Name (Doing Business As).
2. Federal Employer Identification Number (EIN). An EIN is a nine-
digit employer identification number (for example, 00-1234567) that has
been assigned by the IRS. Entities that do not have an EIN may apply
for one on Form SS-4, Application for Employer Identification Number.
The Form SS-4 is available by calling 1-800-829-4933 or going to the
IRS website at https://www.irs.gov/pub/irs-pdf/fss4.pdf. EIN data is
important for accurately identifying registrants and cross-referencing
information reported about the registrant on other filings, such as the
Form 5500 filed by the pooled employer plans operated by the
registrant.
3. Business Telephone. We expect that pooled plan providers, like
many or most existing 401(k) providers, will operate a call center
designed to handle inquiries from employers interested in or already
participating in a pooled employer plan as well as participants and
beneficiaries covered by plans operated by the registrant. The separate
requirement to provide contact information for the registrant's
principal compliance officer gives the Department and others with
compliance concerns a means of contacting a responsible person at the
registrant. The business telephone number requirement is focused mainly
on including in the public Form PR data that the Department will post
on its website a way for interested/participating employers and covered
employees to contact the pooled plan provider for information. As such,
we are soliciting comments on whether this data element should allow a
call center number to be reported as the business telephone number.
4. Business Mailing Address.
5. Address of any public website or websites of the pooled plan
provider or any affiliates to be used to market any such person(s) as a
pooled plan provider to the public or to provide public information on
the pooled employer plan operated by the pooled plan provider. The
Department believes this information will be useful in the Department's
oversight of pooled plan providers and will also assist employers
performing due diligence in selecting and monitoring pooled employer
plans. The Department also expects that most pooled plan providers will
have such websites, and believes that having information on such
websites provides an alternative to requiring more information to be
submitted as part of the registration process.
6. The name, mailing address, telephone number, and email address
for the primary compliance officer of the pooled plan provider. The
Department believes it is important that it, as well as participating
employers and covered employees, have an effective means of
communicating with a responsible person at the pooled plan provider
regarding compliance questions or concerns. The Department is proposing
that the registration include an email address for the compliance
officer, but solicits comments on whether alternative or additional
means of contacting the compliance offer should be included in the
registration.
7. The agent for service of legal process for the pooled plan
provider, and the address at which process may be served on such agent,
and in addition, a statement that service of legal process may be made
upon the pooled plan provider. The proposal would allow either a person
or a process service company to be identified as the agent for service
of legal process.
8. The approximate date when pooled plan operations are expected to
commence. The SECURE Act requires that the registration must be filed
before the pooled plan provider begins operations. Accordingly, this
data element is important to enable the Department to ensure compliance
with the SECURE Act requirement. As noted elsewhere, the Department is
proposing that the registration be filed not more than 90 or less than
30 days before the pooled plan provider begins operations.
9. A description of administrative and investment services that
will be offered or provided by the pooled plan provider, including
identification of any affiliates expected to have a role in the
provision of those administrative and investment services, and a
description of the roles of such affiliates. For this purpose, the term
``affiliates'' includes all persons who are treated as a single
employer with the person intending to be a pooled plan provider under
section 414(b), (c), (m), or (o) of the Code and are expected to
provide services to pooled employer plans sponsored by the
[[Page 54293]]
pooled plan provider, and any officer, director, partner, employee, or
relative (as defined in section 3(15) of the Act) of such person; and
any corporation or partnership of which such person is an officer,
director, or partner. Information regarding when various plan services
will be provided by the pooled plan provider or any affiliate will
assist the Department and prospective participating employers evaluate
the pooled plan provider and whether there are potentials for conflicts
of interest with respect to the operations or investments of any pooled
employer plans to be operated by the provider.
10. A statement disclosing any federal or state criminal conviction
related to the provisions of services to, operation of, or investments
of, any employee benefit plan against the pooled plan provider, or any
officer, director, or employee of a pooled plan provider, if the
conviction, or related term of imprisonment served, is within ten years
of the date of the registration. In the Department's view, this data
element focuses on relevant legal proceedings, previous violations, and
relevant negative information that will be useful in the Department's
oversight of pooled plan providers. For example, under ERISA section
411, the Department is responsible for ensuring disqualified parties do
not serve in positions or capacities prohibited under the statute.
Although this question is intentionally presented without all the
technical provisions and specifications in section 411 of ERISA, that
statutory provision prohibits individuals convicted of disqualifying
crimes from serving in plan-related capacities during or for a period
of 13 years after such conviction or the end of imprisonment, whichever
is later, subject to some provisions allowing that period to be
shortened.\9\ This data would also assist employers performing due
diligence in selecting and monitoring pooled employer plans. The
Department solicits comments on whether civil judgments should be
included here, and if, so whether the requirement with respect to civil
judgments should be further limited to just certain types of civil
judgments, e.g., those involving claims of fraud or dishonesty with
fraud or dishonesty defined similarly to those terms in the fidelity
bonding provisions in ERISA section 412 and the Department's
implementing regulations.
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\9\ See also Beck v. Levering, 947 F.2d 639 (2d Cir. 1991) (in a
civil action, permitting lifetime injunction against an individual
from providing services to ERISA plans).
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11. A statement disclosing any ongoing criminal, civil, or
administrative proceedings related to the provisions of services to,
operation of, or investments of any employee benefit plan, in any court
or administrative tribunal by the federal or state government or other
regulatory authority against the pooled plan provider or any officer,
director, or employee of the pooled plan provider. As with the
information on criminal convictions, this data element focuses on
relevant legal proceedings, previous violations, and relevant negative
information that will be useful in the Department's oversight of pooled
plan providers and will also assist employers performing due diligence
in selecting and monitoring pooled employer plans.
B. Reportable Event Supplemental Filings
Before the pooled plan provider initiates operations of a pooled
employer plan, the proposal would require the pooled plan provider to
submit a supplemental filing with the name, trustee identification
information, and EIN for the plan. The timing of this requirement
arises from Code section 413(e)(3), which provides that the
requirements to be a pooled plan provider (including the requirement to
register with the Secretary of the Treasury before beginning operations
as a pooled plan provider) must be satisfied ``with respect to any
plan.''
The proposal would also require additional filings for (i) any
changes in the previously reported registration information and (ii)
specified events affecting either the pooled plan provider or a plan it
sponsors that may signal financial problems or other circumstances that
could potentially put the pensions of covered employees at risk.\10\
These supplemental filings would provide important information to the
Department, the Treasury Department, and the IRS to help them protect
plan participants and beneficiaries and conduct more effective
monitoring and oversight of pooled employer plans and pooled plan
providers. Without this kind of timely information, the agencies would
typically not learn of risks to a pooled employer plan until the plan
files a Form 5500, possibly many months after the event and when
opportunities for protecting plan participants from financial injury
have been missed. Reporting changes in the previously filed
registration information also will help the Department ensure that the
information regarding pooled plan providers posted on its website and
available to the public is up to date. Otherwise the Department,
employers, and the public would have to rely on outdated information
until a Form 5500 was filed for the plan and then would need to compare
the registration information with the subsequently filed information
about pooled plan providers in Forms 5500 submitted by the pooled plan
provider on behalf of the pooled employer plans the providers operate
and have to rely on outside sources to determine which information is
correct.
---------------------------------------------------------------------------
\10\ If only correcting a mistake in a previous filing, the
person should indicate that on the form by checking the box for an
amended filing instead. See discussion in Section II.C.
---------------------------------------------------------------------------
Therefore, pooled plan providers would need to disclose certain
changes in a supplemental filing within 30 days of the occurrence of
the change. These changes are:
1. Any change in the registration information previously reported
by the pooled plan provider. In the Department's view, it is important
that the registration information it has, and that it posts on its
website, be accurate and up to date. The Department intends that the
filing system for the pooled plan provider registrations will enable
registrants submitting a supplemental filing to complete the basic
identifying information regarding the registrant and update only those
parts of the registration with a change in the required information.
2. Any one of the following changes in circumstances of the pooled
plan provider:
(i) Significant change in the corporate or business structure of
the pooled plan provider, e.g., merger, acquisition. As noted above,
the Department considered other registration regimes in developing this
proposal, and some included data collections regarding business events
or trouble that would be of consequence to users of the registration
information. In the Department's view, a significant change in the
pooled plan provider's corporate structure could have consequences that
affect the pooled employer plans as well as participating employers and
covered employees and could also give rise to possible conflicts of
interest that would not have existed in the absence of the transaction.
(ii) Initiation of bankruptcy, receivership, or other insolvency
proceeding for the pooled plan provider or an affiliate, or ceasing all
operations as a pooled plan provider. It is important for both
participating employers and the agencies charged with oversight of
pooled plan providers and pooled employer plans to have information
about insolvency proceedings as soon as is reasonably practicable to
make sure that the
[[Page 54294]]
interests of participants and beneficiaries are protected. The
Department already has a REACT project whose aim is to respond in an
expedited manner to protect the rights and benefits of plan
participants when the plan sponsor faces severe financial hardship or
bankruptcy and the assets of the employee benefit plan are in jeopardy.
Under REACT, when a company has declared bankruptcy, the Department's
goal is to take immediate action to (1) ascertain whether there are
plan contributions which have not been paid to the plans' trust, (2)
advise all affected plans of the bankruptcy filing, and (3) provide
assistance in filing proofs of claim to protect the plans, the
participants, and the beneficiaries. EBSA also attempts to identify the
assets of the responsible fiduciaries and evaluate whether a lawsuit
should be filed against those fiduciaries to ensure that the plans are
made whole and the benefits secured. The Department expects that it
will either expand the REACT program or establish a similar program
specifically designed for pooled plan providers and pooled employer
plans, and this supplemental reportable event information would be
important.
(iii) Receiving written notice of the initiation of any
administrative or enforcement action in any court or administrative
tribunal by any federal or state governmental agency or other
regulatory authority against the pooled plan provider or any officer,
director, or employee of the pooled plan provider, related to the
provision of services to, operation of, or investments of any pooled
employer plan. Timely knowledge of such actions will help the agencies
fulfill their oversight functions and also assist prospective and
existing participating employers properly carry out their duties under
the SECURE Act provisions with respect to selection and monitoring of
pooled employer plans. For purposes of the registration, employees of
the pooled plan provider would include employees of the pooled employer
plan, but only those who handle assets of the plan within the meaning
of section 412 of ERISA or who are responsible for the operations or
investments.
(iv) Receiving written notice of a finding of fraud or dishonesty
by federal or state court or a federal or state governmental agency
related to the provision of services to, operation of, or investments
of any pooled employer plan or other employee benefit plan against the
pooled plan provider or any officer, director, or employee of the
pooled plan provider. As with information regarding actions by
governmental agencies or other regulatory authorities against the
provider, information about court or governmental agency findings of
fraud or dishonesty in connection with the provision of services to,
operation of, or investments of any employee benefit plan is important
for agency oversight and for participating employers with respect to
their duties under the SECURE Act provisions regarding selection and
monitoring of the pooled employer plans.
(v) Receiving written notice of the filing of any federal or state
criminal charges related to the provision of services to, operation of,
or investments of any pooled employer plan or other employee benefit
plan against the pooled plan provider or any officer, director, or
employee of the pooled plan provider Such actions, too, are relevant to
the selection and monitoring obligations of participating employers,
and while ERISA section 411 bars serving as an ERISA fiduciary
following a wide range of crimes, this information is limited to those
criminal charges related to the provision of services to, operation of,
or investments of any pooled employer or other employee benefit plan.
C. Amendment and Correction of Registration Information
The Department intends that the filing system for registrations,
similar to that for the Form 5500, will allow pooled plan providers the
ability to file corrections and amendments of their registration and
reportable event filings. The Department does not believe that it would
be appropriate to read the SECURE Act in a way that would result in
inadvertent or good faith errors in registrations resulting in a
failure to register and a consequent nullification of the person's
status as a person authorized to act as a pooled plan provider. Thus,
under the proposal, inadvertent or good faith errors and omissions in a
filing's content generally would not be treated as a failure to
register, provided that a corrected or amended filing is submitted
within a reasonable period of the discovery of the error or omission.
If only correcting information previously reported, such as if an
incorrect name was entered for an affiliate of the pooled plan
provider, a person would indicate on the form that the filing is an
amended filing, not a supplemental filing.
Further, the Department expects at a later date to propose new
questions on the Form 5500 that would ask whether a pooled plan
provider filed its registration statement with the Secretary, including
any required updates, and to report the electronic confirmation number
provided to the pooled plan provider at the time that the registration
was received. These would be similar to the questions currently on the
Form 5500 that require reporting by multiple employer group health
plans about their compliance with registration and reporting
requirements on the Form M-1 (Report for Multiple Employer Welfare
Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs)).
The questions would provide the Department, the Treasury Department,
the IRS, participating employers, and other stakeholders with
information that would allow them to connect the Form PR registration
with the Form 5500 for all pooled employer plans operated by the
registrant.
D. Final Filing
As proposed, if a pooled plan provider has ceased operating all
pooled employer plans and has filed a supplemental reportable event
filing to indicate that the last pooled employer plan for which it
served as the pooled plan provider has been terminated and ceased
operating, the provider would be required to file a final registration
filing. For this purpose, a plan would be treated as terminated and
having ceased operations when a resolution has been adopted terminating
the plan, all assets under the plan (including insurance/annuity
contracts) have been properly distributed to the participants and
beneficiaries or legally transferred to the control of another plan,
and when a final Form 5500 has been filed for the plan. The final Form
PR filing would be due within 30 days of the filing of the last final
Form 5500 for the last pooled employer plan the provider operates. A
single combined filing may be used both to report that the last pooled
employer plan operated by the provider has been terminated and ceased
operating and to serve as the final Form PR filing by the pooled plan
provider. The final filing is intended to assist the Department's
maintenance of an accurate database of persons serving as pooled plan
providers and provision of accurate public information about pooled
plan providers to employers, participants, beneficiaries, and other
interested persons.
E. Electronic Filing
This proposal also includes a provision to require electronic
filing of all pooled plan provider registrations with the Department.
The Department believes that regular mail is not the most efficient or
cost-effective way to file and process these notices and statements.
Because the internet is widely
[[Page 54295]]
accessible to persons who file these notices and statements, the
Department expects that persons interested in being pooled plan
providers will find electronic filing easier and more cost-effective
than paper filing. The submission process would also assist pooled plan
providers by ensuring that all of the required information would be
included in the registration before the electronic filing could be
completed through the internet site. In addition, as previously
mentioned, the process would provide an electronic registration
confirmation receipt to the pooled plan provider. Electronic filing
should also facilitate the disclosure of the information to
participating employers, covered participants and beneficiaries, and
other interested members of the public. Once a registration statement
is filed, the data would be posted on the Department's website and be
available to the public. Thus, the Department believes that filers and
data users all stand to benefit from electronic filing in ways that are
consistent with the goals of the E-Government Act of 2002.\11\
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\11\ Public Law 107-347, sec. 2 (Dec. 17, 2002).
---------------------------------------------------------------------------
The Department plans to use the same system and registration
process for filing the pooled plan provider registration that plan
administrators currently use, and that pooled plan providers will use,
to file the Form 5500 for employee benefit plans, including pooled
employer plans.
Under ERISA Section 505, in addition to having the authority to
prescribe such regulations the Department determines may be necessary
or appropriate to carry out the provisions of Title I of ERISA, the
Department has the authority to prescribe forms. Pursuant to that
authority, the Department is proposing a new EBSA form--Form PR. The
proposed form and the accompanying instructions would be the required
filing format for pooled plan provider registrations and would
facilitate the regulatory registration requirements proposed in this
document. The proposed form and instructions are attached as Appendix
A.
The pooled plan provider registration form and instructions, like
other Department forms, will undergo OMB review under the Paperwork
Reduction Act of 1995 (PRA), and be assigned an OMB Control number
prior to being published for use. The volume of pooled plan provider
registration filings is unknown but as discussed in detail in the
regulatory impact analysis, the Department assumes for purposes of this
proposal that fewer than 5,000 persons will register initially as
pooled plan providers.
F. Coordination With the Treasury Department and the Internal Revenue
Service
As noted above, the SECURE Act requires pooled plan providers to
register with the Department as well as with the Treasury Department
and the IRS. The Department coordinated with those agencies to develop
this proposal. They have advised that filing the registration statement
with the Department, including the supplemental statement identifying a
pooled employer plan for which the pooled plan provider is acting in
that capacity prior to the initiation of operations of each such plan,
will also satisfy the Code requirement to register as a pooled plan
provider with respect to that plan. The Department will continue to
consult with the Treasury Department and the IRS in connection with
their development of the pooled plan provider registration requirements
and filing process.
G. Request for Public Comments
The Department invites comments from interested persons on all
facets of the proposed rule. Commenters are free to express their views
not only on the specific provisions of the proposal as set forth in
this document, but on other issues germane to the subject matter of the
proposal. The Department also requests comment on the following
questions:
1. Is the definition of ``beginning operations as a pooled plan
provider,'' which determines whether initial registration is required,
appropriate in scope? Should the definition exclude marketing and
solicitation efforts so that the initial registration is tied solely to
beginning operation of a pooled employer plan? Should the deadlines for
filing an initial registration be nearer to the date of actual public
marketing activities if the pooled plan provider intends only to engage
in marketing and solicitation efforts, and will not enroll any employer
or employee in a pooled employer plan until at least 30 days after
initial registration?
2. Are there any additional classes of information or types of
reportable events that should be included in the registration
requirement?
3. Is there a more efficient or effective way of collecting
reportable event information that would reduce administrative burdens
and expenses?
4. Could the burden associated with the collection of reportable
event information be reduced by better aligning the collection with
other disclosure requirements for pooled plan providers?
5. Are there other federal or state filings for insurance
companies, banks, and other financial institutions, such as the Form
ADV (or similar Securities and Exchange Commission (SEC) or State
registration forms) for financial advisors, on which the Department
could rely as an alternative source of information about pooled plan
providers and the plans they operate?
6. Are there particular forms or numbers (e.g., Form ADV, SEC
registration number, Central Registration Depository number, or
National Association of Insurance Commissioners Code) that could be
referenced in the registration that would, with nominal burden, help
employers find more information about pooled plan providers and compare
providers across platforms of available information?
7. Should the disclosure of ``ongoing criminal, civil, or
administrative proceedings related to the provisions of services to,
operation of, or investments of any employee benefit plan by the pooled
plan provider'' be expanded? For example, would disclosing settlements
of fiduciary liability claims against pooled plan providers with the
Department or PBGC, including settlements under ERISA Sec.
206(d)(4)(A)(iii), assist employers performing due diligence in
selecting and monitoring pooled employer plans?
Comments should be submitted in accordance with the instructions at
the beginning of this document. The Department believes that 30 days
will afford interested persons an adequate amount of time to analyze
the proposed rule and submit comments.
Regulatory Impact Analysis
Summary--The SECURE Act was enacted to expand retirement savings.
Section 101 of the SECURE Act amends section 3(2) of ERISA to eliminate
the commonality of interest requirement for establishing certain
individual account plans, or ``pooled employer plans,'' that meet
specific requirements. Among these requirements, such plans must
designate a ``pooled plan provider'' to serve as a named fiduciary and
as the plan administrator. Further, section 101 of the SECURE Act
requires pooled plan providers to register with the Department and the
Treasury Department before beginning operations. The statute expressly
provides a separate authorization for the Department to require
additional information.
The Department has examined the effects of this rule as required by
[[Page 54296]]
Executive Order 12866,\12\ Executive Order 13563,\13\ the Congressional
Review Act,\14\ Executive Order 13771,\15\ the Paperwork Reduction Act
of 1995,\16\ the Regulatory Flexibility Act,\17\ section 202 of the
Unfunded Mandates Reform Act of 1995,\18\ and Executive Order
13132.\19\
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\12\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
\13\ Improving Regulation and Regulatory Review, 76 FR 3821
(Jan. 18, 2011).
\14\ 5 U.S.C. 804(2) (1996).
\15\ Reducing Regulation and Controlling Regulatory Costs, 82 FR
9339 (Jan. 30, 2017).
\16\ 44 U.S.C. 3506(c)(2)(A) (1995).
\17\ 5 U.S.C. 601 et seq. (1980).
\18\ 2 U.S.C. 1501 et seq. (1995).
\19\ Federalism, 64 FR 153 (Aug. 4, 1999).
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1.1. Executive Orders
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health,
and safety effects; distributive impacts; and equity). Executive Order
13563 emphasizes the importance of quantifying costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility.
Under Executive Order 12866, ``significant'' regulatory actions are
subject to review by the Office of Management and Budget (OMB).\20\
Section 3(f) of the Executive Order defines a ``significant regulatory
action'' as an action that is likely to produce a rule that does any of
the following:
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\20\ Regulatory Planning and Review, supra note 2.
---------------------------------------------------------------------------
(1) Has an annual effect on the economy of $100 million or more in
any one year, or adversely and materially affects a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local or tribal governments or communities
(also referred to as ``economically significant'');
(2) creates a serious inconsistency or otherwise interferes with an
action taken or planned by another agency;
(3) materially alters the budgetary impacts of entitlement grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) raises novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
A full regulatory impact analysis must be prepared for major rules
with economically significant effects (for example, $100 million or
more in any one year), and OMB reviews ``significant'' regulatory
actions. OMB determined that this rule is not economically significant
within the meaning of section 3(f)(1) of the Executive Order but is
significant under 3(f)(4). Therefore, the Department has provided an
assessment of the potential costs, benefits, and transfers associated
with this proposed rule. In accordance with the provisions of Executive
Order 12866, OMB has reviewed this proposed rule.
1.2. Introduction and Need for Regulation
As added by the SECURE Act, section 3(44) of ERISA requires a
person to register as a pooled plan provider with the Secretary, and
provide other information the Secretary may require, before operating a
pooled employer plan. These proposed rules respond to the direction
given to the Secretary in the SECURE Act and provide the requirements
for registering with the Secretary.
The required information allows the Department to identify pooled
plan providers so that it may monitor their actions. While the Form
5500, which pooled plan providers will also be required to file,
collects such information, Form 5500 reporting is generally unavailable
for more than 18 months after a plan starts. The SECURE Act's
registration requirements give the Department more immediate access to
pooled plan provider information, allowing it to observe how this new
market develops and assess the need for further guidance.
1.3. Affected Entities
The goal of the SECURE Act is to increase retirement savings, in
particular by expanding the options for small employers to participate
in multiple employer plans. The Department expects this expansion to
produce administrative savings and new investment opportunities for
many small employers. Section 101 of the SECURE Act allows commercial
service providers to serve as the plan administrator and a named
fiduciary of defined contribution pension plans of more than one
unrelated employer. Expanding the ways in which service providers and
employers may craft and join multiple employer plans should reduce
costs and administrative burdens for participating employers. Rather
than sponsoring individual plans with separate Form 5500 filing and
audit requirements, a single Form 5500 filing by the pooled plan
provider would satisfy the annual reporting requirement for all the
participating employers. Pooled plan providers would be both a named
fiduciary and plan administrator for the pooled employer plan, and they
would be required to register with the Department before operating any
such plans.
The Department has identified certain existing entities that it
believes would be most likely to serve as pooled plan providers. For
example, recordkeepers that currently administer retirement plans may
be well positioned to serve as pooled plan providers and some
recordkeepers have affiliated entities that may seek to provide
investment alternatives and services to the plan. Similarly, many
Professional Employer Organizations (PEOs) have served as plan
administrators and would likely have little trouble taking on the role
of pooled plan provider. Further, insurance companies have expressed
interest in serving as pooled plan providers and some have prior
experience providing similar services. Chambers of Commerce have
connections with employers, but many are small with few full-time
staff. Also, few Chambers of Commerce have sponsored MEWAs. While
retirement plan advisors such as broker-dealers and registered
investment advisers are also plausible candidates, the Department
believes that many would be reluctant to assume the named fiduciary and
plan administrator roles. Entities such as registered investment
advisors may likely be more comfortable serving as section 3(38)
investment managers for the pooled plan providers.
Given these assumptions, the Department currently estimates that
roughly 3,200 unique entities will initially register to serve as
pooled plan providers. Recordkeepers and plan administrators of
existing defined contribution plans are most likely to enter the
market, followed by PEOs, direct annuity writers, chambers of commerce,
and plan advisors.
[[Page 54297]]
Estimated Pooled Plan Provider
----------------------------------------------------------------------------------------------------------------
Expected share Estimated
Universe % number
----------------------------------------------------------------------------------------------------------------
Unique Record Keepers and Plan Administrators for existing DC 2,378 50 1,189
Plans \a\......................................................
Professional Employer Organization \b\.......................... 907 25 227
Chambers of Commerce \c\........................................ 4,000 5 200
Large Broker-Dealers \d\........................................ 173 5 9
Registered Investment Adviser Firms \d\......................... 30,246 5 1,512
Direct Annuity Writers (Insurance Companies) \e\................ 386 25 97
-----------------------------------------------
Total....................................................... 38,090 8 3,233
----------------------------------------------------------------------------------------------------------------
\a\ 2017 Form 5500 Schedule C Data.
\b\ National Association of Professional Employers, https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics.
\c\ Association of Chamber of Commerce Executives reports that there are 4,000 Chambers with at least 1 full-
time staff person.
\d\ 2019 FINRA Industry Snapshot. FINRA reported 3,607 FINRA registered firms in 2018. There were 173 with 500
or more registered representatives.
\e\ National Association of Insurance Commissioners.
1.4. Benefits
The SECURE Act requirement that pooled plan providers first
register with the Department before beginning operations alerts
regulators to the presence and intent of new entities. Registering
allows potential pooled plan providers access to this newly created
market. These registrations would require contact information, links to
any websites containing marketing information for any pooled employer
plan(s) established by the provider, the date operations are expected
to commence, and a description of the provider's services and
affiliates. These registrations will be publicly available and will
provide a complete list of registered pooled plan providers. In
addition, the supplemental filing requirement ensures that providers
update their initial filing to report material changes relevant to the
pooled plan provider's and participating employers' fiduciary duties
(including, for example, inception of bankruptcy and litigation,
criminal, or regulatory enforcement actions against the pooled plan
provider). This will help provide transparency regarding the provider's
management and business practices, allowing employers to better survey
the market when choosing a pooled plan provider or deciding whether to
continue to rely on an existing provider and the Department and
Treasury Department to carry out their statutory oversight duties.
In the Department's view, the statutory purpose of the registration
requirement is to provide the Department with sufficient information
regarding entities acting as pooled plan providers to engage in
effective monitoring and oversight of this new type of ERISA retirement
plan. As discussed above, the potential for inadequate employer
oversight of the activities of a pooled employer plan and its plan
fiduciaries and other service providers may be greater than for other
plans sponsored by an employer because the nature of the plan involves
participating employers passing along more responsibility to the pooled
plan provider than they do in other plan arrangements. The proposed
information collection, which has been kept limited to minimize burden,
will enable the Department to fulfill its oversight responsibilities.
Links to any websites containing marketing information for any pooled
employer plan(s) established by the provider, the date operations are
expected to commence, a description of the provider's services and
affiliates, and material changes relevant to the pooled plan provider's
fiduciary duties (including, for example, bankruptcy, litigation, and
criminal or regulatory enforcement actions) all serve to help with
monitoring and oversight.
As stated above, the SECURE Act amended ERISA to remove possible
barriers to the broader use of multiple employer plans. This objective
was accomplished primarily by allowing multiple unrelated employers to
participate in an open MEP called a pooled employer plan that does not
require commonality among participating employers or a genuine
organizational relationship unrelated to participation in the plan. By
allowing most of the administrative and fiduciary responsibilities of
sponsoring a retirement plan to be transferred to pooled plan
providers, pooled employer plans provide employers with an option to
provide a workplace retirement plan to their employees with reduced
burdens and costs compared to sponsoring their own separate single
employer retirement plan. Consequently, more plan formation and broader
availability of workplace retirement plans should occur, especially
among small employers.
The Department is uncertain of the number of pooled employer plans
that could be created based on the proposed rule, the number of
employers that will participate in such plans, and the number of
participants and beneficiaries that will be covered by them. The
Department is confident, however, that some pooled employer plans will
come into existence.
It is possible that each pooled plan provider that registers will
offer at least one new pooled employer plan and larger pooled plan
providers may offer more than one new pooled employer plan. As is the
case with multiple employer plans generally, some pooled employer plans
may be large or very large in terms of participating employers, others
medium in size, and some may even be small, although small pooled
employer plans would seem to lack the attraction and efficiency of the
economies of scale that could exist for larger pooled employer plans.
The effects on coverage are somewhat uncertain because of the
possibility of at least some zero-sum gain. Some new pooled employer
plans will attract participating employers that currently do not offer
retirement savings opportunities to their employees. The result in this
situation would be a net coverage increase in this country and
retirement security would be improved to some extent for the employees
of these participating employers.\21\ At the
[[Page 54298]]
same time, however, the Department expects that some existing
retirement plans, most likely those of small single employer plan
sponsors, could terminate or otherwise cease to operate in their
current form and merge into pooled employer plans. A dominant influence
in this direction would be the administrative cost savings and other
operational efficiencies that come with economies of scale. The
Department has repeatedly acknowledged the potential benefits that
could inure to small employers and their employees if they join
together in a multiple employer plans and similar cooperative
arrangements.\22\ For different reasons, though, it also is possible
that some existing multiple employer plans, such as those structured
under 29 CFR 2510.3-55 (Association Retirement Plans or ``ARPs''),
could convert to pooled employers plans.\23\ Conversions of this type
might occur, for example, if an ARP were to conclude that restrictions
under section 3(5) of ERISA, such as the geographic limitations imposed
pursuant to 29 CFR 2510.3-55(b)(2) or the substantial employment
function test for bona fide professional employer organization
arrangements in 2510.3-55(c)(1), were disadvantageous or inefficient
relative to the conditions for being a pooled employer plan. The total
number of defined contribution plans, therefore, could decrease as a
result of these mergers and conversions; however, net coverage (i.e.,
the number of total defined contribution plan participants) could
increase, because (1) participants in plans that merge or convert into
pooled employer plans would continue to be covered under a retirement
plan, and (2) some employers that do not currently provide their
employees with retirement plan access would join pooled employer plans
and their employees would count as newly-covered participants.
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\21\ Workplace retirement plans often provide a more effective
way for employees to save for retirement than saving in their own
IRAs. Compared with saving on their own in IRAs, workplace
retirement plans provide employees with: (1) Higher contribution
limits, (2) generally lower investment management fees as the size
of plan assets increases, (3) a well-established uniform regulatory
structure with important consumer protections, including fiduciary
obligations, recordkeeping and disclosure requirements, legal
accountability provisions, and spousal protections, (4) automatic
enrollment, and (5) stronger protections from creditors. At the same
time, workplace retirement plans provide employers with choice among
plan features and the flexibility to tailor retirement plans that
meet their business and employment needs. See 84 FR 37528.
\22\ 84 FR 37508 (July 31, 2019) (Definition of ``Employer''
Under Section 3(5) of ERISA-- Association Retirement Plans and Other
Multiple-Employer Plans); see also 83 FR 28912 (June 21, 2018)
(Definition of ''Employer'' Under Section 3(5) of ERISA--Association
Health Plans).
\23\ Section 101 of SECURE Act itself contemplates such
conversions and provides a special rule for existing plans to elect
pooled employer plan status (new section 3(43)(C)) of ERISA).
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Pooled employer plans generally would benefit from scale advantages
that small businesses do not currently enjoy, and the Department
expects that such plans will pass some of the attendant savings onto
participating employers and participants. Large scale may create two
distinct economic advantages for pooled employer plans. First, as scale
increases, marginal costs for pooled employer plans would diminish and
pooled plan providers would spread fixed costs over a larger pool of
member employers and employee participants, creating direct economic
efficiencies. Second, asset managers commonly offer proportionately
lower prices, relative to assets invested, to larger investors, under
so-called tiered pricing practices resulting in decreased expense
ratios based on the aggregate amount of money invested by a single
pooled employer plan.
For example, larger plans tend to have lower fees overall.\24\
Generally, small plans with 10 participants are paying approximately 50
basis points more than plans with 1,000 participants.\25\ Small plans
with 10 participants are paying about 90 basis points more than large
plans with 50,000 participants. Grouping small employers together into
a pooled employer plan could facilitate savings through administrative
efficiencies and sometimes through price negotiation (market power).
The degree of potential savings may be different for different types of
administrative functions, e.g., scale efficiencies can be very large
with respect to asset management, and may be smaller, but still
meaningful, with respect to functions such as marketing, distribution,
asset management, recordkeeping, and transaction processing.
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\24\ 84 FR 37508, 37535.
\25\ Deloitte Consulting and Investment Company Institute,
Inside the Structure of Defined Contribution/401(k) Plan Fees, 2013:
A Study Assessing the Mechanics of the ``All-in'' Fee (Aug. 2014).
Deloitte Consulting LLP conducted a survey of 361 defined
contribution plans for the Investment Company Institute. The study
calculates an ``all in'' fee that is comparable across plans
including both administrative and investment fees paid by the plan
and the participant. Deloitte predicted these estimates by analyzing
the survey results using a regression approach calculating basis
points as a share of assets. See 84 FR 37508. 37535.
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Other potential benefits of the expansion of MEPs through the
creation of pooled employer plans could include: (1) Increased economic
efficiency as small businesses can more easily compete with larger
companies in recruiting and retaining workers due to a competitive
employee benefit package, (2) enhanced portability for employees that
leave employment with an employer to work for another employer
participating in the same pooled employer plan, and (3) higher quality
data (more accurate and complete) reported to the Department on the
Forms PR and 5500. The Department requests comments regarding such
potential benefits.
1.5. Costs
The costs most directly associated with this rule are those of
preparing and submitting the registration statement. The PRA section of
this document, below, discusses these costs in detail. The estimated
cost is $688,000 in the first year and $72,400 in subsequent years.\26\
The perpetual time horizon annualized cost is $106,100 in 2016 dollars,
using a seven percent discount percent rate, discounted from 2016.
Other indirect costs may ensue, depending on the extent of pooled
employer plan formation, as well as the extent of conversions, mergers,
and contractions among existing plans. The extent of these actions is
unknown at this time; in other words, such additional costs are highly
uncertain. With respect to any new pooled employer plan, these indirect
costs would relate to pooled plan provider complying with the
requirements of the SECURE Act that are not codified by this proposed
regulation.
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\26\ The total ten-year cost is $1,215,000 with a three percent
discount rate and $1,084,000 with a seven percent discount rate. The
annualized ten-year cost is $142,000 using a three percent discount
rate, and $154,000 using a seven percent discount rate.
---------------------------------------------------------------------------
1.6. Transfers
Several potential transfers could occur as a result of this
proposed rule. To the extent the formation of pooled employer plans
leads employers that previously sponsored a retirement plans to
terminate or freeze these plans, or leave another group plan like an
ARP, and join a pooled employer plan, there may be a transfer if the
pooled employer plan utilizes different service providers and asset
types than the terminated plan. A similar transfer might occur in cases
where employers who previously did not offer their employees a
retirement plan join a pooled employer plan. Employees of these
employers may have been saving for retirement previously in different
ways, such as through an IRA, which would have different service
providers. Service providers that specialize in providing services to
pooled employer plans or are affiliated with a pooled plan provider
might benefit at the expense of other providers who specialize in
providing services to small plans or IRAs. Those different service
providers would
[[Page 54299]]
experience gains or losses of income or market share.
The rule could also result in asset transfers if pooled plan
providers invest in different types of assets than plans that merge or
convert to pooled employer plans. For example, small plans tend to rely
more on mutual funds, while larger plans have greater access to other
types of investment vehicles such as bank common collective trusts and
insurance company pooled separate accounts, which allow for
specialization and plan specific fees. This movement of assets could
see profits move from mutual funds to other types of investment
managers.
Finally, the Code generally gives tax advantages to certain
retirement savings over most other forms of savings.\27\ Consequently,
all else being equal, workers who are saving money in tax qualified
retirement savings vehicles generally can enjoy higher lifetime
consumption and wealth than those who does not. The magnitude of the
relative advantage generally depends on the worker's tax bracket, the
amount contributed to the plan, the timing of contributions and
withdrawals, and the investment performance of the assets in the
account. Workers that do not contribute to a qualified retirement
savings vehicle due to lack of access to a workplace retirement plan do
not reap this relative advantage. This rule would likely increase the
number of American workers with access to tax-qualified workplace
retirement plans, which would spread this financial advantage to some
people who are not currently receiving it. If access to retirement
plans and savings increase as a result of this rule, a transfer will
occur flowing from all taxpayers to those individuals receiving tax
preferences as a result of new and increased retirement savings.
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\27\ Employer contributions to qualified pension plans and,
generally, employee contributions made at the election of the
employee through salary reduction are not taxed until distributed to
the employee, and income earned on those amounts is not taxed until
distributed. The tax expenditure for ``net exclusion of pension
contributions and earnings'' is computed as the income taxes forgone
on current tax-excluded pension contributions and earnings less the
income taxes paid on current pension distributions.
---------------------------------------------------------------------------
As is evident from the foregoing, the exact magnitude of the
potential transfers is uncertain at this stage, as is the precise
identities of the transferors and transferees. Much depends on the
number of pooled employer plans that eventually come into existence,
the extent of plan consolidation, the number of employers that begin
participating anew in pooled employer plans and the savings habits of
the employees of these employers (who might have heretofore been saving
through an IRA). And a major influence on each of these factors will
be, among other things, the nature, extent and timing of the regulatory
intervention needed to implement the SECURE Act, as well as the general
state of the economy. The Department specifically solicits comments and
data on the potential magnitude of these transfers and the associated
costs and benefits.
1.7. Uncertainty
While the Department has identified types of service providers that
it believes will be well positioned to act as pooled plan providers, it
is unclear how many will choose to enter the market and whether they
will do so in the first year of enactment or in later years. The
Department has based its assumptions on discussions with stakeholders
and articles on emerging markets. The Department invites comments on
which and how many entities are likely to register as pooled plan
providers.
Section 101 of the SECURE Act requires pooled plan provides to
register with the Department and provide such other information as the
Secretary may require before beginning operations as a pooled plan
provider. The Department seeks to include information that would prove
useful, while minimizing costs. The Department requests comments on
whether (1) any required information does not satisfy this condition or
(2) it should require other information to be included in the
registration whose benefits would outweigh any administrative burden.
1.8. Alternatives
Section 101 of the SECURE Act requires pooled plan providers to
register with the Secretary and provide such other information as the
Secretary may require, before beginning operations as a pooled plan
provider. The Department considered several alternative forms of
information to be included that are discussed below.
The Department could have required fewer data elements, such as
contact information only, including address and email. While slightly
less burdensome than the proposed requirements, requiring fewer data
elements would provide substantially less information to the
Department, which would impede its ability to fulfill its critical
oversight role of protecting participants and plan assets. Employers
also would receive less information to survey the market when choosing
a pooled plan provider or deciding whether to continue to rely on an
existing provider.
The Department considered requiring pooled plan providers to file a
registration for each pooled employer plan. This would have required
pooled plan providers to file multiple similar filings. The Department
did not choose this option, because it would have required pooled
service providers to make multiple filings while providing minimal
additional benefits.
The Department also considered not requiring pooled service
providers to make supplemental filings. While this option would have
been less burdensome than the chosen option, it would have provided
less information to the Department and interested employers. Requiring
pooled service providers to report updated information to the
Department can provide key information the Department needs to fulfill
its oversight role. Therefore, the Department determined that the
benefits of requiring supplemental filings justified any additional
cost that pooled plan providers would incur to furnish the updated
information.
2. Paperwork Reduction Act
As part of its continuing effort to reduce paperwork and respondent
burden, the Department conducts a preclearance consultation program to
allow the general public and federal agencies to comment on proposed
and continuing collections of information in accordance with the
PRA.\28\ This helps to ensure that the public understands the
Department's collection instructions, respondents can provide the
requested data in the desired format, reporting burden (time and
financial resources) is minimized, collection instruments are clearly
understood, and the Department can properly assess the impact of
collection requirements on respondents.
---------------------------------------------------------------------------
\28\ 44 U.S.C. 3506(c)(2)(A) (1995).
---------------------------------------------------------------------------
Currently, the Department is soliciting comments concerning the
proposed information collection request (ICR) included in the
registration requirements for pooled plan providers. To obtain a copy
of the ICR, contact the PRA addressee shown below or go to http://www.RegInfo.gov.
The Department has submitted a copy of the proposed rule to the
Office of Management and Budget (OMB) in accordance with 44
U.S.C.3507(d) for review of its information collections. The Department
and OMB are particularly interested in comments that address the
following:
Evaluate whether the collection of information is
necessary for the functions of the agency, including
[[Page 54300]]
whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the collection of information, including the validity of the
methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology (e.g., permitting
electronically delivered responses).
Comments should be sent to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503 and marked ``Attention: Desk
Officer for the Employee Benefits Security Administration.'' Comments
can also be submitted by fax at (202) 395-5806 (this is not a toll-free
number), or by email at [email protected]. OMB requests that
comments be received within 30 days of publication of the proposed rule
to ensure their consideration.
PRA Addressee: Address requests for copies of the ICR to G.
Christopher Cosby, Office of Policy and Research, Employee Benefits
Security Administration, U.S. Department of Labor, 200 Constitution
Avenue NW, Room N-5718, Washington, DC 20210. The PRA Addressee may be
reached by telephone at (202) 693-8410 or by fax at (202) 219-5333.
(These are not toll-free numbers.) ICRs also are available at http://www.RegInfo.gov (http://www.reginfo.gov/public/do/PRAMain).
The SECURE Act requires a person to register as a pooled plan
provider with the Secretary, and provide other information the
Secretary may require, before beginning operations. This information
collection contains the requirements to register with the Secretary
under section 3(44) of the Act. The information collection will utilize
the EFAST 2 electronic filing system that pooled plan providers will
use to file the Form 5500 required to be filed on behalf of the pooled
employer plan the provider operates. The proposed Form PR and
Instructions that appear in Appendix A are included as part of the
information collection request.
The Department has designed a two-part approach for this
requirement. The first consists of a simple registration of contact
information, links to marketing websites, and a description of services
and the role of any affiliates. Pooled plan providers must
electronically register with the Department at least 30 days, but not
more than 90 days, before beginning operations. The information
included should be collected by the pooled plan provider during its
normal course of business, so collection should not require additional
effort by the administrator. Therefore, the Department estimates that
compiling and submitting the initial registration information will take
about 45 minutes and impose no additional costs on the administrator.
To limit costs, a pooled plan provider needs to file only one
registration regardless of the number of pooled employer plans it
operates, provided that a supplemental statement is filed identifying
each pooled employer plan before the initiation of operations of the
plan as a pooled employer plan. Assuming roughly 3,200 pooled plan
providers, the Department estimates a burden of 2,425 hours, with an
equivalent cost of $402,000, in the first year.\29\
---------------------------------------------------------------------------
\29\ 3,223 pooled plan providers * 0.75 hours = 2,425 hours.
2,425 hours * $165.63 = $401,653. Labor rates are EBSA estimates,
found at https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
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If the pooled plan provider does not begin operating any new pooled
employer plans, does not change its use of affiliates or other related
parties to provide services or its contact information, or does not
experience any material changes in condition set forth in the proposal,
it may go for a period of years without needing to supplement its
registration. The Department anticipates that this will be the case
with many pooled plan providers.
The supplemental filing requirement is similar to, although more
limited than, filers' obligations with respect to the Form M-1, which
requires entities to submit additional filings to document material
changes. Approximately seven percent of entities filing a Form M-1 in
2017 submitted an additional filing after undergoing a material change.
Assuming pooled plan providers will behave in a similar manner, the
Department expects roughly 230 pooled plan providers to submit
supplemental filings documenting material changes annually, including
in the first year.
The supplemental filing amends the original registration to include
employer identification numbers (EINs) and contact information for
pooled employer plans that begin operations, cease operations, or
experience material changes relevant to the pooled plan provider's
fiduciary duties (including, for example, bankruptcy, litigation, and
criminal or regulatory enforcement actions). Accordingly, the
Department estimates the supplemental filing would take 30 minutes for
pooled plan providers to submit. The Department does not believe,
however, that the pooled plan provider would incur any additional costs
beyond the labor costs necessary to collect and submit this
information. The Department estimates that there will be 3,460 filings
under the second part of this requirement in the first year, imposing a
burden of 1,730 hours, with an equivalent cost of $287,000.\30\
---------------------------------------------------------------------------
\30\ 3,460 pooled plan providers * 0.50 hour = 1,730 hours.
1,730 hours * $165.63 = $286,540. Labor rates are EBSA estimates,
found at https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
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In subsequent years, the Department believes that the percentage of
pooled plan providers reporting beginning or ceasing operations of
pooled employer plans will roughly parallel the experience of Form M-1
filers. Approximately 14 percent of Form M-1 filers indicated they
began operations in 2017, while six percent indicated they ceased
operations.\31\ Assuming pooled plan providers behave in a similar
manner, the Department expects an additional 650 registrations related
to beginning or ceasing operations annually in subsequent years.\32\
These filings require an hour burden of 324 hours with an equivalent
cost of nearly $54,000 in subsequent years.
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\31\ Pension plans face additional burdens in terminating, and
so using welfare plans termination rates as a proxy may overstate
the number of incidents. The Department welcomes comments addressing
this assumption.
\32\ 3,233 * 0.14 = 453 pooled plan providers report pooled
employer plans beginning operation, 453 pooled plan providers * 0.50
hour = 227 hours. 227 hours * $165.63 = $37,598 3,233 * 0.06 = 453
pooled plan providers report pooled employer plans ending operation,
194 pooled plan providers * 0.50 hour = 977 hours. 97 hours *
$165.63 = $16,060.
---------------------------------------------------------------------------
The estimated total burden of this information collection is 4,155
hours, with an equivalent cost of $688,000, in the first year and 437
hours, with an equivalent cost of $72,400, in subsequent years.\33\
---------------------------------------------------------------------------
\33\ 873 filings * 0.5 hours = 437 hours. The 873 filings in
subsequent years are 453 pooled plan providers reporting pooled
employer plans beginning operations, 194 pooled plan providers
reporting pooled employer plans ending operations, and 226 pooled
plan providers filing other changes.
---------------------------------------------------------------------------
The Department expects a large number of pooled plan providers to
file the first part of registrations in the initial year, and
significantly fewer to file in subsequent years as the market
stabilizes. Incidents of filing updated
[[Page 54301]]
and amended registration statements are expected to increase after the
first year, as pooled employer plans enter and exit the market, change
service providers, and change pooled employer plan offerings.
A summary of paperwork burden estimates follows:
Type of Review: New collection.
Agency: Employee Benefits Security Administration, U.S. Department
of Labor.
Title: Registration requirements to serve as a pooled plan provider
to pooled employer plans.
OMB Control Number: 1210-NEW.
Affected Public: Businesses or other for-profits.
Estimated Number of Respondents: 1,660 3-year average (3,233 first
year, 873 subsequent years).
Estimated Number of Annual Responses: 2,813 3-year average (6,693
first year, 873 subsequent years).
Frequency of Response: Occasionally.
Estimated Total Annual Burden Hours: 1,676 3-year average (4,155
first year, 437 subsequent years).
Estimated Total Annual Burden Cost: 0.
3. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \34\ imposes certain
requirements with respect to federal rules that are (1) subject to the
notice and comment requirements of section 553(b) of the Administrative
Procedure Act \35\ and (2) likely to have a significant economic impact
on a substantial number of small entities. Unless an agency determines
that a proposal is not likely to have a significant economic impact on
a substantial number of small entities, section 603 of the RFA requires
the agency to present an initial regulatory flexibility analysis of the
proposed rule. The Department has determined that this proposed rule,
which would require prospective pooled plan providers to register with
the Department prior to beginning operations, is not likely to have a
significant economic impact on a substantial number of small entities.
Therefore, the Department certifies that the proposed rule will not
have a significant economic impact on a substantial number of small
entities. The Department estimates that only about eight percent of the
potential market will decide to be a pooled plan provider and be
subject to the rule. Each of these entities would incur an estimated
cost of $124 to register and $83 to update the registration if needed.
Below is justification for this determination.
---------------------------------------------------------------------------
\34\ 5 U.S.C. 601 et seq. (1980).
\35\ 5 U.S.C. 551 et seq. (1946).
---------------------------------------------------------------------------
3.1. Need for and Objectives of the Rule
Section 101 of the SECURE Act requires pooled plan providers to
register with the Department, the Treasury Department, and the IRS. As
noted above, the Treasury Department and the IRS have indicated that
filing the registration statement with the Department will also satisfy
the Code's registration requirement. The required information under the
proposal would allow regulators to identify and monitor pooled plan
providers. While some of the required information may be found in the
Form 5500, which pooled plan providers will also be required to file on
behalf of each participating employer plan they operate, this reporting
is not available for more than 18 months after the pooled plan
providers begin operating, and would not necessarily include some
important information regarding the pooled plan providers themselves,
such as bankruptcy filings, or the commencement of any criminal, civil,
or administrative proceedings in any court or administrative tribunal
by the federal or state government or other regulatory authority
against the pooled plan provider related to the provisions of services
to, operation of, or investments of, any employee benefit plan.
Requiring pooled plan providers to register gives both the agencies and
the public, including participating employers, more immediate access to
the information for monitoring purposes, and enables the agencies to
monitor how this new market develops and assess whether further
guidance is needed.
3.2. Affected Small Entities
The Department has identified certain existing entities that it
believes would be most likely to serve as pooled plan providers. For
example, recordkeepers that currently administer retirement plans are
well positioned to serve as pooled plan providers. Similarly, many PEOs
have served as plan administrators and would likely have little trouble
taking on the role of pooled plan provider. Further, many insurers have
expressed interest in serving as pooled plan providers. While
retirement plan advisors such as broker-dealers and registered
investment advisors are also plausible candidates, the Department
believes that many would be reluctant to assume the named fiduciary and
plan administrator roles. Entities such as registered investment
advisors may likely be more comfortable serving as section 3(38)
investment managers for the pooled plan providers.
Given these assumptions, the Department estimates that roughly
3,200 unique entities will initially register to serve as pooled plan
providers. Recordkeepers and plan administrators of existing defined
contribution pension plans are most likely to enter the market,
followed by PEOs, chambers of commerce, and plan advisors.
While the Department does not have complete information on which of
these entities meet the Small Business Administration's definition of a
small entity, many of these entities likely are small. The Department
estimates that about half of current recordkeepers and plan
administrators currently serving DC plans would register to become
pooled plan providers. Other types of providers will likely comprise a
smaller share of entities that register. Overall, the Department
estimates that about eight percent of the universe of entities the
Department has identified as well-suited to serve as pooled plan
providers are likely to register. The table below includes both large
and small entities. The Department cannot estimate with specificity the
distribution by size of the providers that will choose to become pooled
plan providers although most of the providers in these service
categories meet the Small Business Administration definition of small
entities, however if the percentages in the footnote are applied to the
number of affected entities in the table below, about 2,600 businesses
could be small businesses.\36\
---------------------------------------------------------------------------
\36\ Some possible affected industries by NAICS code are as
follows: 524292 third-party administration, more than 90 percent
small business; 524113 underwriting annuities and life insurance,
more than 70 percent small business, 523999 financial investment
services, more than 95 percent small businesses; 523999 brokerage,
financial investment services, more than 95 percent small business;
561330 professional employer organization, more than 90 percent
small business.
Estimated Pooled Plan Provider
----------------------------------------------------------------------------------------------------------------
Expected share Estimated
Universe (%) number
----------------------------------------------------------------------------------------------------------------
Unique Record Keepers and Plan Administrators for existing DC 2,378 50% 1189
Plans \a\......................................................
[[Page 54302]]
Professional Employer Organization \b\.......................... 907 25 227
Chambers of Commerce \c\........................................ 4,000 5 200
Large Broker-Dealers \d\........................................ 173 5 9
Registered Investment Advisor Firms \d\......................... 30,246 5 1512
Direct Annuity Writers (Insurance Companies) \e\................ 386 25 97
-----------------------------------------------
Total....................................................... 38,090 8% 3,233
----------------------------------------------------------------------------------------------------------------
\a\ 2017 Form 5500 Schedule C Data.
\b\ National Association of Professional Employers, https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics.
\c\ Association of Chamber of Commerce Executives reports that there are 4,000 Chambers with at least 1 full-
time staff person.
\d\ FINRA Industry Snapshot. FINRA reported 3,607 FINRA registered firms in 2018. There were 173 with 500 or
more registered representatives.
\e\ National Association of Insurance Commissioners.
3.3. Impact of the Rule
The Department estimates that it would take the average pooled plan
provider with a labor rate of $165.63 only 45 minutes to register, at
an expense of $124.23, because the information necessary is readily
available through the normal course of business.\37\ Pooled plan
providers submit the filing only when data elements change, the
administrator begins or ceases operations for any pooled employer plan,
or the pooled plan provider undergoes a material change. The
supplemental filing will require an estimated 30 minutes to complete,
at an expense of $82.82. As with the initial registration, the required
information for the supplemental filing is readily available. The cost
to file both a registration and a supplemental filing in a single year
would be $207.16, which would be less than one percent of revenues if a
business had more than $20,700 in revenues. The Department lacks
complete data to determine the number of firms that do not meet this
revenue threshold. Available data suggests that 15 percent of possibly
affected firms have revenues less than $100,000.\38\
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\37\ To register: 0.75 hours per pooled plan provider; 0.75
hours * $165.63 = $124.23. To update a registration: 0.50 hours *
$165.63 = $82.82. The total labor rate for a financial manager is
used as a proxy for the labor rate. Labor rates are EBSA estimates
found at www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
\38\ Data set supplied by the Small Business Administration
containing data on the number of firms and revenue by NAICS codes.
Estimates used NAICS codes 524292, 56133, 523120, 52393, 523130, and
524113.
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To further show how small a $207 burden is, note that a one-person
firm consisting of an individual with a labor rate of $165.63 would
need to only work 125 hours to have revenue of $20,700. That same
individual working 2,000 hours, a standard work year, would produce
revenue of $331,260 resulting in $207.16 being significantly less than
once percent of revenue.
3.4. Duplicate, Overlapping, or Relevant Federal Rules
The proposed rule would not conflict with any relevant federal
rules. Section 101 of the SECURE Act requires pooled plan providers to
register both with the Department and with the Treasury Department and
the IRS; the proposed Form PR would satisfy the requirements under both
Title I of ERISA and the Code. The statute expressly provides a
separate authorization for the Departments to require additional
information.
4. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 requires each
federal agency to prepare a written statement assessing the effects of
any federal mandate in a proposed or final agency rule that may result
in an expenditure of $100 million or more (adjusted annually for
inflation with the base year 1995) in any one year by state, local, and
tribal governments, in the aggregate, or by the private sector.\39\ For
purposes of the Unfunded Mandates Reform Act, as well as Executive
Order 12875, this proposal does not include any federal mandates that
the Department expects would result in such expenditures by state,
local, and tribal governments, or the private sector.\40\ This rule
simply requires prospective pooled plan providers to register with the
Department.
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\39\ 2 U.S.C. 501 et seq. (1995).
\40\ Enhancing the Intergovernmental Partnership, 58 FR 58093
(Oct. 28, 1993).
---------------------------------------------------------------------------
5. Federalism Statement
Executive Order 13132 outlines fundamental principles of
federalism, and requires that federal agencies adhere to specific
criteria when formulating and implementing policies that have
``substantial direct effects'' on the states, the relationship between
the national government and states, or on the distribution of power and
responsibilities among the various levels of government.\41\ Federal
agencies promulgating regulations that have federalism implications
must first consult with state and local officials, then describe in the
preamble to the final rule the extent of their consultation and the
nature of the officials' concerns.
---------------------------------------------------------------------------
\41\ Federalism, supra note 7.
---------------------------------------------------------------------------
In the Department's view, these proposed regulations would not have
federalism implications because they would not have direct effects on
the states, on the relationship between the national government and the
states, nor on the distribution of power and responsibilities among
various levels of government. This proposed rule simply requires
private companies that intend to offer pooled employer plans to
register with the Department.
The Department welcomes input from states regarding this
assessment.
List of Subjects in 29 CFR Part 2510
Employee benefit plans, Pensions.
For the reasons stated in the preamble, the Department of Labor
proposes to amend 29 CFR part 2510 as follows:
PART 2510--DEFINITIONS OF TERMS USED IN SUBCHAPTERS C, D, E, F, G,
AND L OF THIS CHAPTER
0
1. The authority citation for part 2510 is revised to read as follows:
Authority: 29 U.S.C. 1002(1), 1002(2), 1002(3), 1002(5),
1002(16), 1002(21), 1002(37), 1002(38), 1002(40), 1002(42),
1002(43), 1002(44), 1031, and 1135; Secretary of Labor's Order No.
1-2011, 77 FR 1088 (Jan. 9, 2012); Sec. 2510.3-101 and 2510.3-102
also issued under sec. 102 of Reorganization
[[Page 54303]]
Plan No. 4 of 1978, 5 U.S.C. App. At 237 (2012), (E.O. 12108, 44 FR
1065 (Jan. 3, 1979) and 29 U.S.C. 1135 note. Sec. 2510.3-38 is also
issued under sec. 1, Public Law 105-72, 111 Stat. 1457 (1997).
0
2. Add Sec. 2510.3-44 to read as follows:
Sec. 2510.3-44 Registration requirement to serve as a pooled plan
provider to pooled employer plans.
(a) General. Section 3(44) of the Act sets forth the criteria that
a person must meet in order to be a pooled plan provider for pooled
employer plans under section 3(43) of the Act.
(b) Registration requirement. Subparagraph (A)(ii) of section 3(44)
requires the person to register as a pooled plan provider with the
Department, and provide such other information as the Department may
require, before beginning operations as a pooled plan provider. For
this purpose, ``beginning operations as a pooled plan provider'' means
publicly marketing services as a pooled plan provider or publicly
offering a pooled employer plan. To meet the requirements to register
with the Department under section 3(44) of the Act, a person intending
to act as a pooled plan provider must:
(1) No earlier than 90 days and no later than 30 days before
beginning operations as a pooled plan provider, file with the
Department the following information on a complete and accurate Form PR
(Pooled Plan Provider Registration) in accordance with the form's
instructions.
(i) The legal business name and any trade name (doing business as)
of such person.
(ii) The business mailing address and phone number of such person.
(iii) The employer identification number (EIN) assigned to such
person by the Internal Revenue Service.
(iv) The address of any public website or websites of the pooled
plan provider or any affiliates to be used to market any such person as
a pooled plan provider to the public or to provide public information
on the pooled employer plans operated by the pooled plan provider.
(v) Name, address, contact telephone number and email address for
the primary compliance officer of the pooled plan provider.
(vi) The agent for service of legal process for the pooled plan
provider, and the address at which process may be served on such agent,
and in addition, a statement that service of legal process may be made
upon the pooled plan provider.
(vii) The approximate date when pooled plan operations are expected
to commence.
(viii) A description of the administrative, investment, and
fiduciary services that will be offered or provided in connection with
the pooled employer plans, including a description of the role of any
affiliates in such services. For purposes of this paragraph (viii), the
term ``affiliate'' includes all persons who are treated as a single
employer with the person intending to be a pooled plan provider under
section 414(b), (c), (m), or (o) of the Internal Revenue Code who will
provide services to pooled employer plans sponsored by the pooled plan
provider and any officer, director, partner, employee, or relative (as
defined in section 3(15) of the Act) of such person; and any
corporation or partnership of which such person is an officer,
director, or partner.
(ix) A statement disclosing any federal or state criminal
conviction related to the provision of services to, operation of, or
investments of, any employee benefit plan, against the pooled plan
provider, or any officer, director, or employee of the pooled plan
provider if the conviction, or related term of imprisonment served,
provider is within ten years of the date of registration.
(x) A statement disclosing any ongoing criminal, civil, or
administrative proceedings related to the provisions of services to,
operation of, or investments of any employee benefit plan, in any court
or administrative tribunal by the federal or state government or other
regulatory authority against the pooled plan provider, or any officer,
director, or employee of the pooled plan provider.
(2) No later than the initiation of operations of a plan as a
pooled employer plan, file with the Department a supplemental report
using the Form PR containing the name and EIN for the pooled employer
plan, and the name, address, and EIN for the trustee for the plan.
(3) Within 30 days of occurrence of the following reportable
events, file with the Department a supplemental report using the Form
PR:
(i) Any change in the information reported pursuant to subparagraph
(b)(1) or (b)(2) of this section.
(ii) Any significant change in corporate or business structure of
the pooled plan provider, e.g., merger, acquisition, or initiation of
bankruptcy, receivership, or other insolvency proceeding for the pooled
plan provider or an affiliate, or ceasing all operations as a pooled
plan provider.
(iii) Receipt of written notice of the initiation of any
administrative or enforcement action related to the provision of
services to, operation of, or investments of any pooled employer plan
or other employee benefit plan, in any court or administrative tribunal
by any federal or state governmental agency or other regulatory
authority against the pooled plan provider or any officer, director, or
employee of the pooled plan provider.
(iv) Receipt of written notice of a finding of fraud or dishonesty
by a federal or state court or federal or state governmental agency
related to the provision of services to, operation of, or investments
of any pooled employer plan or other employee benefit plan against the
pooled plan provider or any officer, director, or employee of the
pooled plan provider.
(v) Receipt of written notice of the filing of any federal or state
criminal charges related to the provision of services to, operation of,
or investments of any pooled employer plan or other employee benefit
plan against the pooled plan provider or any officer, director, or
employee of the pooled plan provider.
(4) Only one registration must be filed for each person intending
to act as a pooled plan provider, regardless of the number of pooled
employer plans it operates. A pooled plan provider must file updates
for each pooled employer plan described in paragraph (b)(2) of this
section, any change of previously reported information, and any change
in circumstances listed in paragraph (b)(3) of this section, but may
file a single statement to report multiple changes, as long as the
timing requirements are met with respect to each reportable change.
(5) If a pooled plan provider has terminated and ceased operating
all pooled employer plans, the pooled plan provider must file a final
supplemental filing in accordance with instructions for the Form PR.
(6) For purposes of this section, a pooled employer plan is treated
as beginning operations when it is considered covered by Title I of
ERISA within the meaning of section 4 of ERISA, and a pooled employer
plan is treated as terminated and ceased operating when a resolution
has been adopted terminating the plan, all assets under the plan
(including insurance/annuity contracts) have been distributed to the
participants and beneficiaries or legally transferred to the control of
another plan, and a final Form 5500 has been filed for the plan.
(7) Registrations required under this section shall be filed with
the Secretary electronically on the Form PR in accordance with the Form
PR instructions published by the Department.
[[Page 54304]]
Signed at Washington, DC, this 18th day of August 2020.
Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
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BILLING CODE 4510-29-C
Instructions for Form PR (Registration for Pooled Plan Provider)
About the Form PR
The Form PR is used to report information for a person or entity
that intends to serve as a pooled plan administrator to pooled employer
plans within the meaning of sections 3(44) and 3(43) of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended, and 29 CFR
2510. 3-44.
You must file the Form PR electronically. You cannot file a paper
Form PR by mail or other delivery service. Your Form PR will be
initially screened electronically. For more information, see the
instructions for Electronic Filing Requirement and the Form PR filing
system at [insert correct web address/hyperlink].
If you have any questions (such as whether you are required to file
this report) or if you need any assistance in completing this report,
please call the EBSA Form PR help desk at 202-693-XXXX.
Table of Contents
Section 1: Who Must File
Registration
Supplemental Filing
Amended Filing
Final Filing
Section 2: When To File
Section 3: Electronic Filing
How To File
Failure To File
Signature and Date
Section 4: Line-by-Line Instructions
Paperwork Reduction Act Notice
Section 1: Who Must File
Any person who wishes to serve as a pooled plan provider to one or
more pooled employer plans must file Form PR (Registration Statement of
Pooled Plan Provider) with the Department of Labor. See ERISA sections
3(43) and 3(44) enacted by the Setting Every Community Up for
Retirement Enhancement Act of 2019, Division O of the Further
Consolidated Appropriations Act, 2020 (Pub. L. 116-94) (December 20,
2019).
Note. ``Person'' for these purposes includes corporations,
partnerships, and sole proprietorships.
Section 3(44) of ERISA establishes requirements for ``pooled plan
providers,'' including a requirement that a person wishing to so act
must register with the Department of Labor and the Department of the
Treasury. The effective date for these provisions allows ``pooled
employer plans'' to begin operating on January 1, 2021.
Under section 3(2) of ERISA, a pooled employer plan is treated for
purposes of ERISA as a single plan that is a multiple employer plan. A
``pooled employer plan'' is defined in section 3(43) as a plan: (1)
That is an individual account plan established or maintained for the
purpose of providing benefits to the employees of two or more
employers, (2) that is a qualified retirement plan or a plan funded
entirely with individual retirement accounts (IRA plan), and (3) the
terms of the plan must meet certain requirements set forth in the
statute.\42\ Specifically, the terms of the plan must--
---------------------------------------------------------------------------
\42\ The term ``pooled employer plan'' does not include a
multiemployer plan or plan maintained by employers that have a
common interest other than having adopted the plan. The term also
does not include a plan established before the date the SECURE Act
was enacted unless the plan administrator elects to have the plan
treated as a pooled employer plan and the plan meets the ERISA
requirements applicable to a pooled employer plan established on or
after such date.
---------------------------------------------------------------------------
designate a pooled plan provider and provide that the
pooled plan provider is a named fiduciary of the plan;
designate one or more trustees (other than an employer in
the plan) to be responsible for collecting contributions to, and
holding the assets of, the plan, and require the trustee(s) to
implement written contribution collection procedures that are
reasonable, diligent, and systematic;
provide that each employer in the plan retains fiduciary
responsibility for the selection and monitoring, in accordance with
ERISA fiduciary requirements, of the person designated as the pooled
plan provider and any other person who is also designated as a named
fiduciary of the plan, and, to the extent not otherwise delegated to
another fiduciary by the pooled plan provider (and subject to the ERISA
rules relating to self-directed investments), the investment and
management of the portion of the plan's assets attributable to the
employees of that employer (or
[[Page 54308]]
beneficiaries of such employees) in the plan;
provide that employers in the plan, and participants and
beneficiaries, are not subject to unreasonable restrictions, fees, or
penalties with regard to ceasing participation, receipt of
distributions, or otherwise transferring assets of the plan in
accordance with applicable rules for plan mergers and transfers;
require the pooled plan provider to provide to employers
in the plan any disclosures or other information that the Secretary of
Labor may require, including any disclosures or other information to
facilitate the selection or any monitoring of the pooled plan provider
by employers in the plan, and require each employer in the plan to take
any actions that the Secretary of Labor or pooled plan provider
determines are necessary to administer the plan or to allow for the
plan to meet the ERISA and Code requirements applicable to the plan,
including providing any disclosures or other information that the
Secretary of Labor may require or that the pooled plan provider
otherwise determines are necessary to administer the plan or to allow
the plan to meet such ERISA and Code requirements;, and
provide that any disclosure or other information required
to be provided to participating employers may be provided in electronic
form and will be designed to ensure only reasonable costs are imposed
on pooled plan providers and employers in the plan.
The fidelity bonding requirements in ERISA section 412 apply to
fiduciaries and other persons handling the assets of a pooled employer
plan, but the maximum bond amount for each such plan official is
$1,000,000 as compared to the $500,000 maximum that applies in the case
of other ERISA-covered plans that do not hold employer securities. See
29 CFR 2550.412-1, 29 CFR part 2580; see also Field Assistance Bulletin
2008-04 (providing a general description of statutory and regulatory
requirements for bonding).
A ``pooled plan provider'' with respect to a pooled employer plan
is defined in ERISA section 3(44) to mean a person that:
Is designated by the terms of the plan as a named
fiduciary under ERISA, as the plan administrator, and as the person
responsible to perform all administrative duties (including conducting
proper testing with respect to the plan and the employees of each
employer in the plan) that are reasonably necessary to ensure that the
plan meets the Code requirements for tax-favored treatment and the
requirements of ERISA and to ensure that each employer in the plan
takes actions as the Secretary or the pooled plan provider determines
necessary for the plan to meet Code and ERISA requirements, including
providing to the pooled plan provider any disclosures or other
information that the Secretary may require or that the pooled plan
provider otherwise determines are necessary to administer the plan or
to allow the plan to meet Code and ERISA requirements;
acknowledges in writing its status as a named fiduciary
under ERISA and as the plan administrator;
is responsible for ensuring that all persons who handle
plan assets or are plan fiduciaries are bonded in accordance with ERISA
requirements; and
registers as a pooled plan provider.
Filing a true, complete, and correct registration statement,
including any required updates, satisfies the requirement under section
3(44) of ERISA to register as a pooled plan provider with the
Department of Labor. See section 3(44) of ERISA for other requirements.
Section 2: When To File
You must file your initial registration statement no earlier than
90 days and no later than 30 days before beginning operations as a
pooled plan provider. See 29 CFR 2510.3-44(b)(1).
For this purpose, ``beginning operations as a pooled plan
provider'' means publicly marketing services as a pooled plan provider
or offering a pooled employer plan. See 29 CFR 2510.3-44(b)(6).
Before the initiation of operations of a plan as a pooled employer
plan with respect to a particular plan, you must supplement your
registration statement with the name and EIN for the pooled employer
plan, and the name, address, and EIN for the trustee for the plan. If
an entity's first operations as a pooled plan provider will be with
respect to a particular plan, the supplemental information required
regarding each plan may be combined with the entity's initial
registration.
You must also supplement your registration statement within 30 days
of any changes to previously reported information or of the occurrence
of the reportable events described below.
See 29 CFR 2510.3-44(b)(3). You should amend your registration
statement within 30 days of discovering an error on your statement, but
no later than the date for filing a Form 5500 Annual Return/Report of
Employee Benefit Plan (Form 5500), where identifying information about
the pooled plan provider, any pooled employer plans it administrators,
or any trustees for those plans would conflict with the information
required on the Form 5500.
Section 3: Electronic Filing
The Form PR must be filed electronically with the Department of
Labor by going to [insert correct title/hyperlink]. Your entries must
be in the proper format in order for the electronic system to process
your filing. For example, if a question requires you to enter a
numerical account number, you cannot enter a word.
To reduce the possibility of correspondence and penalties:
Complete all lines on the Form PR unless otherwise
specified.
Do not enter ``N/A'' or ``Not Applicable'' on the Form PR
unless specifically permitted.
``Yes'' or ``No'' questions on the Form PR cannot be left
blank, unless specifically permitted. Answer either ``Yes'' or ``No,''
but not both.
Do not enter social security numbers in response to questions
asking for an employer identification number (EIN). Because of privacy
concerns, the inclusion of a social security number on the Form PR or
on an attachment that is open to public inspection may result in the
rejection of the filing.
To correct errors and/or omissions on a previously filed Form PR,
submit a completed Form PR indicating the filing is an amended report
in Part I.
Failure To File
You are not permitted to act as a pooled plan provider unless you
electronically file and sign a registration statement in accordance
with the Department's regulation at 29 CFR 2510.3-44 and these
instructions. You may be liable for breaches of fiduciary duty under
ERISA and other state and federal law violations, including for
misrepresentation regarding status as a pooled plan provider. The
failure to file an update would not automatically result in a
conclusion that, by operation of law, the pooled employer plans
administered by the pooled plan provider would no longer be single
plans and instead, a group of individual plans that use the same
arrangement for operating their plans.
Identifying Information and EIN: You must use the same identifying
information for the pooled plan provider on Form PR, including name and
EIN, on the Form 5500 for each plan the pooled plan provider
administers.
Signature and Date
A person filing to satisfy the conditions of section 3(44) of ERISA
and
[[Page 54309]]
29 CFR 2510.3-44 must sign this registration statement, indicating that
the contents are true and correct to the best of the signer's
knowledge. If the pooled plan provider does not electronically sign a
filing, the filing status will indicate that there is an error with the
filing. With respect to the initial registration, if it is unsigned,
the filing will not constitute the required registration statement for
such provider to operate a pooled employer plan.
The pooled plan provider or, if the pooled plan provider is an
entity, a person authorized to sign on behalf of the pooled plan
provider must electronically sign the Form PR submitted to the
electronic filing system.
The Form PR must be filed electronically and signed. To obtain an
electronic signature, go to [insert correct web address/hyperlink] and
register as a signer. You will be provided with a UserID and PIN. Both
the UserID and PIN are needed to sign the Form PR. The system will
prevent the submission of any filing that does not include all required
information. A completed filing will generate an online receipt. The
pooled plan provider must keep a copy of the receipt as part of the
plan's records as required by section 107 of ERISA.
If you have questions about using or completing the Form PR, please
contact the Form PR Help Desk at [insert telephone number].
Section 4: Line-by-Line Instructions
Important: ``Yes/No'' questions must be marked ``Yes'' or ``No,''
but not both. ``N/A'' is not an acceptable response unless expressly
permitted in the instructions to that line.
Part I--Filing Type. Check the appropriate box to indicate filing
type.
Initial filing. This is the registration statement for a person
that intends to serve as a pooled plan provider to pooled employer
plans. Only one registration must be filed for each person intending to
act as a pooled plan provider, regardless of the number of pooled
employer plans it operates.
Supplemental reportable event filing. This is to report any
reportable event information additional to the initial or the most
recent supplemental filing. This includes identifying each plan the
pooled plan provider establishes and certain changes in the pooled plan
provider's status.
Check ``Supplemental Filing'' and on Line 6 check the box to
identify whether you are reporting information about a new pooled
employer plan, a change in information previously reported, e.g., a
change in the pooled plan provider's address since the last filing or
the identification of a new affiliate providing services to the pooled
employer plans operated by the pooled plan provider, or other change in
circumstances. If you are correcting a mistake in a previous filing of
the Form PR, check the ``Amended'' filing box.
Note. The information reported on the Form PR regarding the pooled
plan provider and any affiliates providing services to the pooled
employer plans operated by the pooled plan provider and on the Forms
5500 filed by the pooled plan provider, as plan administrator on behalf
of the pooled employer plans it operates, must match. A mismatch could
result in Form 5500 correspondence.
Amended filing. Check ``amended filing'' only if you are correcting
information previously reported on a Form PR you filed; for example,
you entered an incorrect name for an affiliate of the pooled plan
provider.
Final filing. Once an entity has terminated operations as a pooled
plan provider, including having ceased operating all pooled employer
plans, the pooled plan provider must file a final supplemental filing.
For purposes of the Form PR, a pooled employer plan would be treated as
terminated and having ceased operations for this purpose when a
resolution has been adopted terminating the plan, all assets under the
plan (including insurance/annuity contracts) have been distributed to
the participants and beneficiaries or legally transferred to the
control of another plan, and when a final Form 5500 Return/Report has
been filed for the plan. The final filing would be due within 30 days
of the filing of the last final Form 5500 for the last pooled employer
plan the provider operates. A single combined filing may be used to
report both that the last pooled employer plan operated by the provider
has been terminated and ceased operating and as the final Form PR
filing for the pooled plan provider.
Caution: Each pooled employer plan operated by the pooled plan
provider must have met the conditions for the filing of a final Form
5500 and such return/report must have been filed for each pooled
employer plan operated by the pooled plan provider before the pooled
plan provider can submit a final filing. See Instructions for the Form
5500.
Part II--Registration Information.
Make sure to use the same identifying information as you use for
other state and federal registration and reporting requirements.
Line 1a. Enter the legal name of the person (person includes both
individuals and entities) registering as the pooled plan provider. If
the person uses a ``trade'' or ``doing business as'' name, also enter
that name (both the legal and trade (d/b/a) name).
Line 1b. Enter a telephone number where participating employers
will be able to reach the pooled plan provider. This does not preclude
the pooled plan provider from also providing to participating employers
a separate, dedicated telephone contact number for a particular pooled
employer plan.
Line 1c. If the pooled plan provider and/or an affiliate uses one
or more public websites to market such person as a pooled plan provider
to the public or to provide participating employers (regardless of
whether there is a registration requirement for full access) with
information about the pooled employer plans in which they participate,
enter the address(es) of such website(s) here.
Line 1d. Enter the business mailing address (include room, apt.,
suite No., and street; or P.O. Box, city or town, state, and ZIP code).
Line 1e. You must enter the Employer Identification Number (EIN)
the pooled plan provider obtained from the Internal Revenue Service
(IRS). You must use the same EIN number as the pooled plan provider
uses for other federal and state filings, including with the IRS and
the U.S. Securities and Exchange Commission (SEC). You must also use
this EIN in the plan administrator field for all Forms 5500 filed for
the pooled employer plans administered by the pooled plan provider.
Do not enter social security numbers in response to questions
asking for an employer identification number (EIN). Because of privacy
concerns, the inclusion of a social security number or any portion
thereof on the Form PR may result in the rejection of the filing.
Persons wishing to act as pooled plan providers that are without an
EIN must apply for one as soon as possible. The EBSA does not issue
EINs. To apply for an EIN from the IRS:
Mail or fax Form SS-4, Application for Employer
Identification Number, obtained at https://www.irs.gov/pub/irs-pdf/fss4.pdf.
See https://www.irs.gov/forms-pubs/about-form-ss-4 for
additional information. The EIN is issued immediately once the
application information is validated. (The online application process
is not yet available for corporations with addresses in foreign
countries.)
Lines 1f, 1g, and 1h. Enter the name, mailing address, telephone
number, and email address for the primary
[[Page 54310]]
compliance officer of the pooled plan provider.
Line 1i. Enter the full name of the agent for service of legal
process and the address at which process may be served on the agent.
Line 2. Enter the approximate date the pooled plan provider expects
to begin operating pooled employer plan(s). (Use MM/DD/YYYY format.)
Caution: The date entered here must be no earlier than 90 and no
later than 30 days before the date of filing this registration
statement.
Line 3. For each plan service or investment product listed in Lines
3a through 3f, indicate whether the pooled plan provider will use
itself or an affiliate to operate the plan. Complete as many entries as
necessary.
For purposes of the Form PR, the term affiliate includes all
persons who are treated as a single employer with the person intending
to be a pooled plan provider under section 414(b), (c), (m), or (o) of
the Internal Revenue Code and are expected to provide services to
pooled employer plans sponsored by the pooled plan provider, and any
officer, director, partner, employee, or relative (as defined in
section 3(15) of the Act) of such person; and any corporation or
partnership of which such person is an officer, director, or partner.
Note. The pooled plan provider must serve as the named fiduciary
and acknowledge in writing its status as such. The pooled plan provider
must acknowledge that it is the plan administrator and responsible for
the administration of each pooled employer plan and acknowledge in
writing its status as such.
Line 4a. You must answer Line 4a; you may not leave it blank.
Answer ``Yes,'' if there have been any criminal convictions, terms of
imprisonment served, or civil judgments against the pooled plan
provider or any officer, director, or employee of the pooled plan
provider, in the 10 years preceding the registration related to the
provision of services to, operation of, or investments of any employee
benefit plan in any criminal, civil, or administrative enforcement
proceeding by a federal or state agency or other regulatory authority
in any federal or state court or administrative tribunal. If you answer
``Yes,'' you must complete all the elements in Line 4b. For purposes of
responding to the Form PR, employees of the pooled plan provider
include employees of the pooled employer plan, but only those who
handle assets of the plan within the meaning of section 412 of ERISA or
who are responsible for the operations or investments.
Line 5a. You must answer Line 5a; you may not leave it blank.
Answer ``Yes,'' if there any pending criminal, civil, or administrative
enforcement proceeding, related to the provisions of services to,
operation of, or investments of any employee benefit plan, by a federal
or state agency or other regulatory authority in any federal or state
court or administrative tribunal against the pooled plan provider or
any officer, director, or employee of the pooled plan provider. If you
answer ``Yes,'' you must complete elements in Line 5b.
Part III--Supplemental Reportable Event Information.
You must supplement your registration statement by reporting
information about each pooled employer plan before beginning operations
as a pooled employer plan. You must also supplement your registration
statement by reporting any change in the information previously
reported or other change in pooled plan provider circumstances within
30 days of the occurrence of the change or of the reportable events
described below. You may file a single supplement to your Form PR to
report multiple simultaneous changes, e.g., beginning to operate two or
more pooled employer plans, or to report a change that applies to the
pooled plan provider with respect to all pooled employer plans it
operates.
Line 6. Type of Supplemental Information. Check the box to identify
whether Part III includes information about a new pooled employer plan,
any change in information previously reported, or a change in pooled
plan provider circumstances. Make sure that all the information in the
Form PR you are submitting is up to date.
To correct information in a previously filed Form PR, check the
``Amended'' filing box, along with correcting the information.
Line 7. Pooled Employer Plan Information. Complete as many
repeating entries as necessary to identify each pooled employer plan
that the pooled plan provider begins operating. In elements a and b,
respectively, enter the name and EIN for each pooled employer plan. In
elements c(1) and c(2), respectively, enter the name, address and the
EIN for the trustee(s) for the pooled employer plans operated by the
pooled plan provider. In element c(3) enter the date the plan began
operating as a pooled employer plan. Complete as many repeating entries
as needed to identify all pooled plans administered by the registrant
pooled plan provider and their trustees. In element c(4) enter the date
the plan terminated and ceased operating as a pooled employer plan.
Caution: You must use the same names, EINs, and other identifying
information provided regarding any pooled employer plan as is provided
on the Forms 5500 for such plans. Failure to use consistent identifying
information on this form and the Forms 5500 for any pooled employer
plan for which you serve as the pooled plan provider could result in
correspondence from the Department of Labor or the Internal Revenue
Service.
Line 8. Change in Pooled Plan Provider Circumstances. Check the
appropriate box(es) and enter all the requested information. Use as
many repeating entries to enter all the required information. For
example, if more than one action has been initiated, complete an entry
for each action.
Line 8a. If there has been a merger between the pooled plan
provider and another entity, enter the date of the merger and identify
the parties involved in the transaction.
Line 8b. If there has been an acquisition by or of the pooled plan
provider, enter the date of the acquisition and identify the parties to
the transaction.
Line 8c. If the pooled plan provider (or any affiliates) involved
in the operations of or providing services to the pooled employer plan
files for bankruptcy or receivership of the pooled plan provider enter
date of filing, enter name of court where action is proceeding, and
enter caption and docket number for the proceeding.
Line 8d. Enter the date the pooled plan provider ceased operations.
Line 8e. You must complete Line 8e upon receiving written notice
that there has been an initiation of any administrative enforcement
action in any court or administrative tribunal by any federal or state
government agency or other regulatory authority against the pooled plan
provider or any officer, director, or employee of the pooled plan
provider, related to the provision of services to, operation of, or
investments of any pooled employer plan or other employee benefit plan.
Line 8f. You must complete Line 8f upon receiving written notice of
a finding by a federal or state court or governmental agency of fraud
or dishonesty against the pooled plan provider or any officer,
director, or employee of the pooled plan provider, related to the
provision of services to, operation of, or investments of any pooled
employer plan or other employee benefit plan.
Line 8g. You must complete Line 8g upon learning that any criminal
charges
[[Page 54311]]
have been filed in any federal or state court against the pooled plan
provider or any officer, director, or employee of the pooled plan
provider, related to the provision of services to, operation of, or
investments of any pooled employer plan or other employee benefit plan.
Paperwork Reduction Act Notice
We ask for the information on this form to carry out the law as
specified in ERISA sections 3(43) (29 U.S.C. 1002(43)) and 3(44) (29
U.S.C. 1002(44)). You are required to give us the information if you
wish to operate as a pooled plan provider. We need it to determine
whether the pooled plan provider is eligible to operate as such under
ERISA and the Code. You are not required to provide the information
requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books and records
relating to a form or its instructions must be retained as long as
their contents may become material in the administration of the
Internal Revenue Code or are required to be maintained pursuant to
ERISA.
Generally, filings on Form PR (Registration Statement for Pooled
Plan Providers) are open to public inspection and are subject to
publication on the internet. You are not required to respond to this
collection of information unless it displays a current, valid OMB
control number. The average time needed to complete and file the form
is estimated below. These times will vary depending on individual
circumstances.
The estimated average time to complete are as follows:
Initial filing: 45 minutes
Supplemental filing: 30 minutes
Amended filing: 30 minutes
Final filing: 30 minutes
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can write to: U.S. Department of Labor,
Office of Policy and Research, Attention: PRA Official, 200
Constitution Avenue NW, Room N-5711, Washington, DC 20210 and reference
Form PR (Registration Statement for Pooled Plan Providers). Do not send
this form to this address. The forms and schedules must be filed
electronically. See How To File-Electronic Filing Requirement.
OMB Control Numbers
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Agency OMB No.
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Employee Benefits Security Administration............... 1210-
Internal Revenue Service................................ 1545-
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[FR Doc. 2020-18504 Filed 8-27-20; 4:15 pm]
BILLING CODE 4510-29-P
